BYD Co. shares fell, bringing losses over the past week to more than 17%, on concern that its price cuts are drawing government scrutiny and becoming unsustainable for the Chinese EV industry.
In a commentary on Sunday, the People’s Daily — the mouthpiece of China’s Communist Party — criticized the “rat-race competition” and warned that price wars can seriously affect supply-chain security. Low-priced and low-quality products would seriously damage the international reputation of “Made-in-China,” it said, without naming any specific companies.
Also over the weekend, China’s automobile industry association warned against “vicious competition” that would hurt profit margins, impair product quality and hinder the healthy development of the industry. The Ministry of Industry and Information Technology agreed with that stance and will step up measures to root out unhealthy competition in in the auto sector and protect market order and consumer rights, media outlet Cailian reported.
BYD has led the bruising price war that’s engulfed China’s auto industry, hurting profit and clouding the outlook for the fast-growing sector that leads the rest of the world in electric vehicle technology. Even though BYD sold 382,476 vehicles in May, its best month yet for 2025, year-on-year growth of 15% was the slowest since August 2020, except for a drop in deliveries in February last year due to the Lunar New Year holiday.
BYD was at the fore of the latest round of discounting, slashing prices as much as 34% last last month in a move that was followed by rivals including Zhejiang Leapmotor Technology Co. and Geely Automobile Holdings Ltd. Analysts at Citigroup estimated that after BYD’s discounts, traffic to its dealerships may have surged between 30% to 40% week-on-week.
So far this year, BYD has sold 1.76 million units against a full-year target of 5.5 million. Morgan Stanley analysts including Tim Hsiao estimate that sales would need to average about 534,000 units per month for the rest of 2025 to reach its goal. The fourth quarter is typically a strong one for all carmakers as they try to move stock before the end of the calendar year.
The deep discounting appears to be helping other automakers boost sales. Leapmotor sold 45,067 vehicles in May, up 148% year-on-year, while Geely Auto’s deliveries increased 46% to 235,208 units. Meanwhile Xpeng Inc. saw sales triple in May, driven largely by its mass-market MONA M03 model.
Notably, BYD’s battery passenger electric vehicle sales of 204,369 last month topped its plug-in hybrid sales of 172,561, only the second time pure EV sales have been in front since early 2024. The company is also ramping up overseas sales, delivering more than 89,000 units in May, its highest on record.
