Shares of Chinese electric vehicle maker BYD fell by up to 8% on Monday. The decline followed weaker profits, driven by heavy discounting in a fiercely competitive market.
Profits fall short of expectations
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. The result marked a 30% fall compared with the same period last year. The company admitted that intensifying price competition across the EV sector has hurt its performance.
Rivals cut deeper into margins
The Shenzhen-based automaker faces mounting pressure from domestic rivals Nio and XPeng, as well as Tesla from the US. All have cut prices to secure market share. BYD shares opened lower in Hong Kong on Monday but regained some ground later in the session.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing, which it said had destabilised the industry. EV makers have used subsidies and zero-interest loans, further tightening margins.
Beijing seeks to rein in discounts
China’s government has urged automakers to halt aggressive discounting, warning of risks to the wider economy. Average car prices in China have dropped by about 19% in two years. They now sit near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite strong overseas sales, BYD’s earnings fell below analyst forecasts. Expectations of a modest increase turned into a sharp decline.
Ambitious targets under pressure
BYD set a goal of 5.5 million sales worldwide in 2025. By the end of July, however, it had sold just 2.49 million. Prof Laura Wu from Nanyang Technological University in Singapore said the results were “surprising”. She argued they show that even leading firms struggle in a cut-throat market.
Wu noted that the share price slide reflected investor disappointment. She warned that earlier policies encouraged too many players, making Beijing’s job harder. While consumers enjoy lower prices now, Wu cautioned that oversupply could become a long-term risk.
Analysts urge perspective
Investment manager Judith MacKenzie of Downing Fund Managers said the downturn should not be seen too negatively. She argued that BYD’s rapid rise made a temporary slowdown inevitable.
The company has already overtaken Tesla as the world’s biggest EV maker, surpassing it in revenue in 2024. Its success has been driven by strong demand for hybrids in China, Asia, and Europe.
