Shares of Chinese electric vehicle maker BYD dropped by as much as 8% on Monday. The fall came after the company posted disappointing results, hit by a price war that continues to grip the industry.
Quarterly results reveal steep losses
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That marked a 30% decline compared with the same period last year. The company admitted that intensifying price competition has dragged down the entire EV sector.
Rivals fight for market share
The Shenzhen-based automaker faces fierce rivalry from Nio, XPeng, and Tesla. All have cut prices to win buyers. BYD shares opened lower in Hong Kong on Monday but recovered slightly later in the session.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing practices, saying they disrupted stability. Makers have leaned on subsidies and zero-interest loans, putting additional strain on margins.
Beijing pushes for stability
Chinese authorities urged carmakers to halt steep discounts, warning they could harm the wider economy. Average car prices in China have dropped around 19% over two years. They now stand near 165,000 yuan ($23,100; £17,100), according to industry figures.
Despite strong overseas demand, BYD’s earnings came in below analyst expectations. Many had forecast a small profit increase, but the company instead reported a decline.
Sales goals under threat
BYD set a target of 5.5 million vehicles this year. By July’s end, it had sold only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore described the results as “surprising”. She said they showed that even industry leaders are vulnerable in a cut-throat battle.
Wu said the share price decline showed clear investor frustration. She warned that past policies created an overcrowded market, making Beijing’s task of easing competition more difficult. Lower prices may please buyers now, but Wu cautioned they risk creating oversupply later.
Analysts point to long-term strength
Investment manager Judith MacKenzie of Downing Fund Managers said the setback should not be viewed too harshly. She argued that BYD’s rapid rise meant a slowdown was always likely.
The company has already overtaken Tesla as the world’s largest EV producer, surpassing it in revenue in 2024. Demand for its hybrid models in China, Asia, and Europe has driven much of that success.
