Shares of Chinese electric vehicle (EV) giant BYD fell by as much as 8% in Hong Kong trading on Monday after the company reported a sharp drop in quarterly profit, underscoring the toll of intensifying price competition in the world’s largest car market.
On Friday, the Shenzhen-based automaker said its net profit for the April–June quarter had slipped to 6.4 billion yuan ($900 million), a 30% decline from the same period last year. Analysts had expected earnings to edge higher, but instead results reflected what BYD described as a market in “fever pitch” competition.
The company cited heavy price-cutting among EV manufacturers as the primary reason for its weaker performance. Rival Chinese firms including Nio and XPeng, along with U.S. competitor Tesla, have all slashed prices in recent months to attract buyers. The resulting pressure has driven down average car prices in China by nearly 19% over the past two years, according to industry estimates, with vehicles now selling for around 165,000 yuan ($23,100).
To win customers, manufacturers have increasingly turned to aggressive tactics such as subsidising dealers and offering zero-interest financing. BYD criticised what it called “industry malpractices” and “excessive marketing” in its earnings statement, noting that the measures were disrupting the market.
The escalating discount war has drawn attention from Chinese regulators. Beijing has urged automakers to curb aggressive price cuts, warning that such strategies could undermine the broader economy. Analysts say government intervention reflects fears of oversupply in the EV sector, which has grown rapidly following years of state-backed subsidies.
Despite expanding sales abroad, BYD’s results fell short of expectations. The company, which has set an ambitious target of 5.5 million global sales in 2024, had sold just 2.49 million vehicles by the end of July.
The disappointing figures triggered a sell-off on Monday morning before BYD’s shares recovered part of their losses later in the day. “The drop in stock price trading this morning signals investors’ disappointment,” said Professor Laura Wu, an industrial policy expert at Nanyang Technological University in Singapore. She noted that even the sector’s leader is vulnerable to the “cut-throat” competition.
Still, some analysts urged perspective. “They’ve had such a meteoric rise that it’s okay to have a bump in the road,” said Judith MacKenzie, head of Downing Fund Managers.
BYD has grown into the world’s largest EV maker, overtaking Tesla in annual revenue in 2024, thanks largely to strong demand for its hybrid models across China, Asia, and Europe.
