BYD shares slide as China's EV price war squeezes profits
Shenzhen automaker posts 30% drop in quarterly net profit as aggressive discounts and dealer subsidies intensify competition
Shares in Chinese electric vehicle maker BYD fell sharply on Monday after the company reported a substantial decline in quarterly profit, highlighting mounting pressure from aggressive price competition in China's auto market.
BYD said its net profit for the April-to-June quarter fell to 6.4 billion yuan ($900 million; £660 million), a drop of about 30% from the same period a year earlier. The company's Hong Kong-listed shares slid as much as 8% at the market open before recovering some losses later in the day.
In a regulatory filing, the Shenzhen-based automaker cited "increased price competition" among China's EV brands as a key factor weighing on profits. BYD said competition had reached a "fever pitch," and pointed to "industry malpractices ... [like] excessive marketing" as contributing to market disruption. The company said some manufacturers had subsidised car dealers and offered zero-interest loans to buyers, steps it described as part of aggressive promotional tactics that have intensified the scramble for customers.
BYD faces intensifying rivalry from local rivals including Nio and XPeng as well as U.S.-based Tesla, all of which have cut prices in recent months to stimulate demand. The wave of discounts has drawn attention from regulators in Beijing, which has urged automakers to stop aggressive discounting to help maintain market order and stability.
Analysts said the price war has compressed margins across the industry, making it harder for larger manufacturers to rely solely on sales volume for growth. BYD, which has been expanding its lineup across battery-electric and hybrid vehicles, had previously reported strong sales growth but warned that rising promotional activity and shrinking margins could blunt profitability in the near term.
The company's second-quarter earnings underscore the broader challenges facing China's EV sector as it evolves from a high-growth market to one marked by intensifying rivalry and price sensitivity. Automakers have increasingly turned to financing incentives and dealer subsidies to move inventory, a trend that market participants say may not be sustainable if it continues to erode profitability.
Investors will be watching how BYD and its peers respond to the pressure on margins, whether through model differentiation, cost control, or strategic pricing adjustments. Policymakers' calls for restraint in discounting add another dimension to the outlook, as authorities seek to balance support for industrial competition with the need to prevent destabilizing market practices.
BYD's results and the market reaction come amid a broader recalibration in the global EV industry, where competition, supply-chain dynamics and shifting consumer demand are prompting automakers to reassess growth strategies and profitability targets.