Shares of Chinese electric vehicle giant BYD plunged sharply this week after the company announced aggressive price reductions across multiple models, sparking concerns about an intensifying price war in China’s EV sector. The company’s stock dropped 8.6% on Monday, followed by an additional 4% dip in early Tuesday trading in Hong Kong, marking a volatile response from investors. Despite this, BYD’s shares remain up more than 50% year-to-date, reflecting long-term confidence in the firm’s growth prospects.
The price cuts, ranging from 10% to 30% and peaking with a 34% discount on the Seal 07 DM-i model, are aimed at clearing excess inventory and stimulating demand amid economic uncertainties. BYD’s official Weibo account confirmed that 22 electric and plug-in hybrid models in the Ocean and Dynasty series will carry these discounts through the end of June. The move comes as the company reported a notable build-up of dealer inventory, with an estimated 150,000 vehicles in stock—roughly half a month’s retail sales.
Market analysts predict that these price adjustments could trigger a surge in weekly sales of 30% to 40%, potentially offsetting the pressure on profit margins. However, fears of squeezed earnings and intensifying competition weighed heavily on the stock market. Other prominent Chinese EV manufacturers, including Geely, Great Wall Motor, and Xpeng, also experienced share declines amid concerns that a price war might erode sector profitability.
Despite short-term market jitters, BYD’s overall growth trajectory remains robust, especially on the international stage. In a milestone achievement, BYD surpassed Tesla in Europe last month by selling 7,231 new battery-electric vehicles—a staggering 169% increase year-on-year. Meanwhile, Tesla’s European sales have declined, partly due to rising anti-Tesla sentiment connected to CEO Elon Musk’s political profile.
BYD’s first-quarter performance underscores its expanding dominance, with nearly 1 million vehicles sold and a net income of 9.15 billion yuan (€1.11 billion), outpacing Tesla’s €359 million in the same period. The company also boasts a superior gross profit margin of 20%, compared to Tesla’s 16%.
Further strengthening its competitive edge, BYD is investing heavily in advanced driver-assistance systems, integrating DeepSeek’s R1 AI model to rival Tesla’s Full Self-Driving technology, potentially at a lower cost. As China’s second-largest battery manufacturer after CATL, BYD benefits from vertical integration and cost control advantages that position it well for future growth.
With a strategic focus on expanding in Southeast Asia, South America, and Europe, supported by a new manufacturing plant in Hungary, BYD is poised to solidify its global footprint despite recent market volatility.
For the full report, visit Euronews Business.