BYD, the world’s largest electric vehicle manufacturer, saw its shares tumble by as much as 8% on Monday after reporting a sharp 30% decline in second-quarter profits, driven by an intense price war in China’s highly competitive auto market. The company’s net profit for April to June fell to 6.4 billion yuan, down from the previous year, despite a 14% rise in revenue to 201 billion yuan.
The stock decline occurred at the open in Hong Kong but pared losses slightly as the trading day progressed. BYD attributed the profit drop to “increased price competition” and “frequent occurrences of excessive marketing” within China’s EV industry, where rivals including Nio, XPeng, and Tesla have aggressively slashed prices to boost sales.
This price war has resulted in average car prices in China decreasing by approximately 19% over the past two years, now averaging around 165,000 yuan. The situation prompted warnings from Chinese authorities in May, who cautioned automakers against engaging in discount practices that could undermine industry stability and China’s global image.
Overseas, BYD has been expanding rapidly, with notable success in European markets. In July, the company achieved over 13,000 new vehicle registrations in Europe, marking a 225% year-on-year increase. However, this international growth was not enough to counter the profit erosion from domestic price pressures.
For the first half of 2025, BYD’s overall performance showed resilience with a 14% increase in net profit to 15.5 billion yuan and a 23% rise in revenue to 371.3 billion yuan, though these figures missed analyst forecasts. The company had set a target of 5.5 million global vehicle sales for the year but had only reached 2.49 million by end-July.
Industry analysts highlight that even dominant players like BYD are vulnerable in such a competitive landscape. Professor Laura Wu from Nanyang Technological University noted that the stock drop reflects investor concerns and that government interventions to curb price wars may be challenging due to market oversaturation.
Despite the setback, some experts view it as a temporary hurdle. Judith MacKenzie of Downing Fund Managers remarked that BYD’s rapid ascent allows for occasional dips, and the company remains a strong player in the global EV market.
The ongoing price war raises questions about the sustainability of current strategies and potential long-term impacts on the industry. BYD’s ability to balance domestic challenges with international expansion will be key to its future trajectory.