Shares of Chinese electric vehicle maker BYD fell by as much as 8% on Monday. The decline followed weaker earnings, pressured by aggressive discounting in a highly competitive market.
Quarterly profits under pressure
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 brands had hurt overall results.
Rivals intensify competition
The Shenzhen-based automaker faces growing pressure from Nio, XPeng, and Tesla. All have cut prices sharply to attract buyers. BYD shares opened lower in Hong Kong but recovered some ground later in the session.
The company described competition as reaching “fever pitch”. It also criticised excessive marketing, which it said destabilised the market. EV makers have relied on subsidies and zero-interest loans, further squeezing margins.
Beijing urges restraint
Chinese authorities have called on carmakers 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 sales, BYD’s earnings fell short of analyst expectations. Predictions of modest growth turned into a sharp decline.
Sales targets face challenges
BYD aimed to sell 5.5 million vehicles globally this year. By the end of July, it had delivered only 2.49 million. Prof Laura Wu of Nanyang Technological University in Singapore described the results as “surprising”. She said even top companies remain exposed in a cut-throat market.
Wu noted the stock drop reflected investor disappointment. She added that previous policies encouraged too many competitors, making the market harder to manage. While lower prices benefit consumers now, she warned they could lead to long-term oversupply.
Analysts see temporary slowdown
Investment manager Judith MacKenzie of Downing Fund Managers said the decline should not be overstated. She argued that BYD’s rapid growth made a slowdown inevitable.
The company has already overtaken Tesla as the world’s largest EV maker, surpassing it in revenue in 2024. Its rise has been fuelled by strong demand for hybrid vehicles across China, Asia, and Europe.
