Shares of BYD, China’s largest electric vehicle (EV) maker, fell sharply by 8.6% on Monday following reports that the company is offering substantial discounts on several models. This move has sparked concerns about a new wave of price wars in China’s already competitive EV market.
The downward trend continued during Asian trading hours on Tuesday, with BYD shares dropping an additional 4% in Hong Kong by early morning (5 a.m. CEST). Despite the recent falls, BYD’s stock remains up over 50% year-to-date on the Hong Kong Stock Exchange. Meanwhile, Tesla’s shares remained mostly flat on Monday but have declined roughly 13% so far this year.
Industry-Wide Impact: Other Chinese EV Makers Also Decline
The aggressive pricing strategy by BYD has raised alarms about weakening EV demand amid China’s sluggish economy and escalating trade tensions with the United States. Shares of other prominent Chinese EV manufacturers, including Geely, Great Wall Motors, and Xpeng Motors, also suffered losses between 4% and 9% on Monday. Investors fear that widespread discounting could squeeze profit margins across the industry.
BYD Announces Deep Price Cuts
According to BYD’s official Weibo account, the company has launched a wide-ranging price reduction on 22 pure electric and plug-in hybrid models, effective until June 30. Discounts range from 10% to 30% and cover models in the popular Ocean and Dynasty series. The largest cut is on the 2007 DM-i model, which is discounted by 53,000 yuan (about €6,460), a 34% decrease.
Analysts Expect Price Cuts to Boost Sales But Pressure Margins
Experts predict that other Chinese automakers will follow BYD’s example as competition intensifies. The price reductions also appear aimed at clearing excess stock of older vehicles. CnEVPost reports that BYD’s dealer inventory rose by approximately 150,000 units in the first four months of 2025, equating to around half a month’s retail sales.
Citi analysts estimate that the price cuts could trigger a 30% to 40% jump in weekly sales, potentially offsetting some of the negative impacts on profit margins.
BYD’s Strong Growth Continues, Surpasses Tesla in Europe
Despite investor concerns over pricing, BYD remains on a strong growth trajectory and continues to challenge Tesla on the global stage. In April, BYD sold 380,089 new energy vehicles, marking a 21% increase compared to the previous year. Its overseas sales hit record highs for the fifth month in a row.
Notably, BYD outpaced Tesla in European sales for the first time last month, registering 7,231 new EVs — a 169% year-over-year increase. Tesla’s sales in Europe declined in 2025, partly due to growing anti-Tesla sentiment linked to CEO Elon Musk’s political involvement.
BYD’s Financial Performance and Strategic Moves
In the first quarter of 2025, BYD sold nearly one million vehicles, steadily progressing toward its ambitious goal of 5.5 million vehicles sold in 2025. The company posted a net profit of RMB 9.15 billion (approximately €1.11 billion) and maintained a gross margin of 20%. In comparison, Tesla reported a net profit of RMB 409 million (€359 million) and a gross margin of 16% during the same period.
BYD is also investing heavily in advanced driver assistance technologies. Its DeepSeek R1 AI system is expected to rival Tesla’s Full Self-Driving (FSD) capabilities but at a significantly lower cost.
Competitive Edge in Batteries and International Expansion
BYD holds the position as China’s second-largest battery manufacturer, trailing only CATL. Its advantages lie in cost control and vertical integration.
Unlike many competitors, BYD’s exposure to U.S. tariffs is limited since it does not sell passenger vehicles in the U.S. market. Instead, it focuses on expanding in Southeast Asia and South America. Additionally, BYD is constructing a manufacturing plant in Hungary, which is expected to boost its sales across Europe.
