Last updated on December 25, 2025
HONG KONG: Shares of Chinese electric vehicle giant BYD Co Ltd fell as much as 8% on Monday after the company reported a steep drop in second-quarter profit, underscoring the intensifying price war in China’s car industry.
The Shenzhen-based automaker said on Friday that its net profit for April–June fell 30% year-on-year to 6.4 billion yuan ($900 million; £660 million). The results missed analyst expectations of modest growth despite robust overseas sales.
BYD, which surpassed Tesla in annual revenue in 2024, pointed directly to “increased price competition” among Chinese EV brands as the key factor weighing on the sector.
Competition at “fever pitch”
“Competition in China’s car sector has reached a fever pitch,” BYD said in its filing, adding that “industry malpractices… [like] excessive marketing” had further disrupted the market.
To win buyers, EV makers have rolled out deep discounts, subsidised dealers, and even offered zero-interest loans. Average car prices in China have dropped 19% over the past two years to around 165,000 yuan ($23,100; £17,100), according to industry estimates.
The aggressive tactics have drawn warnings from Beijing, which has urged automakers to scale back excessive price cuts to protect the economy from oversupply risks.
Market pressures and missed targets
Despite growing sales abroad, BYD has sold only 2.49 million vehicles by the end of July, less than half of its 5.5 million global sales target for the year.
The company’s underwhelming results rattled investors, with its stock slipping sharply at the Hong Kong open before trimming some losses later in the day.
Analysts weigh in
The latest numbers show that even China’s EV leader is vulnerable in a cut-throat market.
“BYD’s ‘surprising’ performance suggests that even the leader of China’s EV sector won’t necessarily win from a cut-throat price war,” said Prof Laura Wu, industrial policy expert at Nanyang Technological University in Singapore.
“[The] drop in stock price trading this morning signals investors’ disappointment,” she added.
Wu also warned that Beijing’s push to end the EV price war may be difficult, given past policies that encouraged too many players to enter the sector. “Price cuts may benefit consumers, but they risk creating an oversupply of Chinese EVs in the long run,” she said.
Still, some analysts see the pullback as a temporary setback.
“They’ve had such a meteoric rise that it’s okay to have a bump in the road,” said Judith MacKenzie, head of investment firm Downing Fund Managers, in comments to the BBC.
Outlook
While BYD retains the title of the world’s largest EV maker and continues to see strong demand for its hybrid models in Asia and Europe, its quarterly performance highlights the risks of margin erosion in the face of relentless competition.
