Shares in BYD and other Chinese carmakers tumbled on Monday, after the electric vehicle champion fired a new salvo in a prolonged price war.
Hong Kong-listed shares in the Shenzhen-based company fell nearly 9 per cent, while its rivals Geely, Li Auto and Xpeng lost 7 per cent, 5 per cent and 4 per cent respectively.
BYD announced a fresh round of price cuts for more than 20 models over the weekend, bringing the price tag of its cheapest model – the pure battery-powered Seagull hatchback – to as low as 55,800 renminbi (Rmb) (€6,803), according to the company’s promotional posts.
The biggest discount – 34 per cent – was applied to the Seal 07 plug-in hybrid sedan, a Rmb53,000 markdown on its original price of Rmb155,800.
The “fixed price” campaign, with cuts effective until the end of June, is expected to help BYD’s second-quarter shipments grow 20 to 30 per cent from the previous quarter, Citi analysts said. “BYD ... is able to register Rmb9,000 net profit per vehicle in the second quarter,” they said in a research note.
The estimate is below the full-year net income per unit guidance of Rmb10,000 that BYD management gave to analysts last month.
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Investors have seen this as BYD protecting its dominant market share, but at the expense of margins. Meanwhile, smaller players with weaker cash positions risk a double blow – losing both profits and market share.
Following BYD’s move, state-owned Changan offered a cash discount worth about 15 per cent on its S07 Sport Utility Vehicle under its sub-brand Deepal.
Stellantis-backed Leapmotor unveiled similar “fixed prices” for its C16 and C11 cars over the weekend, amounting to 28 and 30 per cent cuts respectively.
“BYD holds significant pricing power in the market, so each round of its price cuts is set to prompt other car brands to follow suit, which will further intensify market competition,” said Li Yanmei, a member of the China Automobile Dealers Association.
A bruising price war in the world’s largest auto market has weighed on companies’ earnings and accelerated industry consolidation over the past two years. China’s development commission, the top national economic planning agency, warned against a “rat race” last week.
“Some companies ... have adopted an ultra-low pricing strategy – even selling below costs,” Li Chao, a spokesperson for the agency, said at a press briefing. “These practices exceed the boundaries and bottom lines of market competition, distort market mechanisms, and disrupt fair competition, which requires corrective action.”
BYD’s stock had hit a record high last week on news that it had outsold Tesla in Europe for the first time. – Copyright The Financial Times Limited 2025
