Shares of Chinese electric vehicle maker BYD dropped by up to 8% on Monday. The decline followed weaker earnings, pressured by deep discounting in a highly competitive EV market.
Earnings take a hit
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 said intense price competition among EV makers had hurt results.
Rivals slash prices
The Shenzhen-based automaker competes with Nio, XPeng, and Tesla. All have cut prices aggressively to attract buyers. BYD shares opened lower in Hong Kong but recovered some ground later in the day.
The company said competition had reached “fever pitch”. It also criticised excessive marketing, which it said disrupted the sector. Manufacturers have offered subsidies and zero-interest loans, further squeezing profit margins.
Beijing urges caution
Chinese regulators have called on automakers to curb steep discounts, warning of risks to the wider economy. Average car prices in China have fallen around 19% over the past two years. They now stand near 165,000 yuan ($23,100; £17,100), according to industry data.
Despite strong overseas demand, BYD’s earnings fell short of analyst expectations. Predictions of modest growth turned into a sharp decline.
Sales targets face pressure
BYD aimed to sell 5.5 million vehicles globally this year. By the end of July, it had sold only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore called the results “surprising”. She said they show even leading companies remain exposed in a cut-throat market.
Wu noted the share price drop reflected investor disappointment. She added that earlier policies encouraged too many competitors, making market control difficult. While lower prices help consumers now, she warned they could create long-term oversupply.
Analysts call it a temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overstated. She argued that BYD’s rapid rise made a temporary slowdown inevitable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its growth has been driven by strong demand for hybrid vehicles in China, Asia, and Europe.
