Shares of Chinese electric vehicle giant BYD fell by up to 8% on Monday. The decline followed weaker-than-expected profits, squeezed by an escalating price war in the domestic auto industry.
Earnings take a sharp hit
On Friday, BYD reported net profit of 6.4bn yuan ($900m; £660m) between April and June. The figure showed a 30% fall compared with the same period a year earlier. The company said growing price competition among electric carmakers has hurt the entire market.
Rivals drive prices lower
The Shenzhen-based group faces rising pressure from Chinese competitors Nio and XPeng, as well as Tesla from the US. All have cut prices to capture sales. BYD’s stock opened lower in Hong Kong on Monday but recovered some ground later in the day.
The company said the industry had reached “fever pitch” levels of competition. It criticised excessive marketing tactics, arguing they further disrupted the market. Carmakers have also offered subsidies and zero-interest loans, reducing profitability across the sector.
Beijing intervenes in the market
Chinese authorities urged automakers to halt aggressive discounting, warning of risks to the broader economy. Industry figures show average car prices in China dropped around 19% in two years. Prices now sit near 165,000 yuan ($23,100; £17,100).
Despite strong international sales, BYD’s results fell short of analyst predictions. Analysts had expected a modest increase in profits, but the company delivered a decline instead.
Lofty sales goals under strain
BYD set a target of 5.5 million global sales this year. By the end of July, the company had sold only 2.49 million cars. Prof Laura Wu from Nanyang Technological University in Singapore said the results were “surprising”. She argued that even leading firms remain vulnerable in a brutal price war.
Wu said the share price slide revealed clear investor disappointment. She added that Beijing faces difficulties curbing competition after earlier policies created an overcrowded market. She also warned that while buyers benefit now, oversupply risks loom for the long term.
Setback seen as temporary
Investment expert Judith MacKenzie of Downing Fund Managers argued that the downturn should not be exaggerated. She said BYD’s extraordinary growth made a slowdown almost unavoidable.
The company has already overtaken Tesla as the world’s biggest EV maker, surpassing it in revenue in 2024. Its rise has been fuelled by the popularity of hybrid models in China, Asia, and Europe.
