Chinese EV Stocks Tumble as BYD Ignites New Price War

Shares of Chinese electric vehicle (EV) makers in Hong Kong took a hit this week, following auto giant BYD Co.'s significant price cuts across its popular models. The move has reignited concerns about intensifying competition and shrinking profit margins within the sector.

How Will BYD's Aggressive Discounts Affect Consumers?

BYD, China's top-selling car brand, announced discounts of up to 35% on 22 of its electric and plug-in hybrid models, with these offers valid until the end of June. This strategic move aims to boost sluggish consumer demand, which has been impacted by China's broader economic slowdown.

For example, the affordable Seagull hatchback saw a 20% price reduction, bringing its cost down to 55,800 yuan (approximately US$7,780). The Seal dual-motor hybrid sedan received the largest cut, dropping by 34%, or 53,000 yuan, to 102,800 yuan.

This aggressive pricing comes as stock levels at Chinese dealerships reached 3.5 million cars in April 2025, or 57 inventory days, the highest since December 2023, indicating an oversupply in the market.

Impact of BYD’s Price Cuts on Competing EV Makers

The news sent shockwaves through the market, with BYD's shares falling as much as 8.3%. Other major players like Li Auto Inc., Great Wall Motor Co., and Geely Automobile Holdings Ltd also experienced drops of over 5%.  

As per news reports, rival companies will be forced to follow suit with their own price reductions, further squeezing already thin profit margins across the industry. Chongqing Changan Automobile Co. and Zhejiang Leapmotor Technologies Ltd. have already announced similar discounts.

Will BYD Succeed?

While the price cuts could lead to a surge in sales, the long-term impact on profitability remains a concern. Despite the industry-wide challenges, BYD posted its best sales month of 2025 in April and remains on track to meet its ambitious full-year target of 5.5 million deliveries.

Global Expansion

Beyond its domestic market, BYD is also making significant strides internationally. In a notable achievement last month, BYD sold more EVs in Europe than Tesla Inc. for the first time, signalling a shift in the continent's EV landscape.

Read more on: India Emerges as a Leading Car Exporter to Japan in FY25

Conclusion 

BYD's sweeping price cuts highlight the intense competition in China's EV market. While this strategy aims to clear inventory and stimulate demand, it will undoubtedly put immense pressure on other automakers and could lead to further industry consolidation.

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