Shares of Chinese electric vehicle maker BYD fell by up to 8% on Monday. The decline followed weaker profits, pressured by aggressive price competition in the EV market.
Profits drop sharply
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) for April to June. That represented a 30% fall compared with the same period last year. The company said intense discounting among EV makers had weighed heavily on results.
Rivals push prices down
The Shenzhen-based automaker faces rising competition from Nio, XPeng, and Tesla. All have slashed prices to attract buyers. BYD shares opened lower in Hong Kong but recovered some ground later in the session.
The company said competition had reached “fever pitch”. It also criticised excessive marketing, which it said disrupted the sector. Manufacturers have relied on subsidies and zero-interest loans, putting further pressure on margins.
Beijing calls for restraint
Authorities in Beijing urged automakers to reduce steep discounts, warning of risks to the broader 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 international sales, BYD’s earnings fell below analyst expectations. Forecasts of modest growth turned into a significant decline.
Sales targets under threat
BYD aimed to sell 5.5 million vehicles worldwide this year. By the end of July, it had sold only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore described the results as “surprising”. She said even leading companies remain vulnerable in a cut-throat market.
Wu said the stock drop reflected investor disappointment. She added that previous policies encouraged too many competitors, making the market harder to control. While lower prices benefit consumers now, she warned of long-term oversupply risks.
Analysts see a temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overemphasised. She argued that BYD’s rapid growth 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 powered by strong demand for hybrid vehicles across China, Asia, and Europe.
