BYD Co. led Chinese electric vehicle stocks lower in Hong Kong on Monday, as investors digested the auto giant’s sweeping price cuts of as much as 34% late last week.
Shares of China’s No. 1 selling car brand tumbled as much as 8.3%, while peers Li Auto Inc., Great Wall Motor Co. and Geely Automobile Holdings Ltd. dropped more than 5% amid investor concern about intensifying competition in the sector.
BYD offered discounts on 22 of its electric and plug-in hybrid models that it sells in China until the end of June, fanning the flames of a renewed sector-wide price war. While EV sales have overall reached new annual highs, growth has been decelerating.
To kickstart sluggish consumer demand — made worse by China’s broader economic malaise — automakers in the world’s biggest car market have slashed sticker prices. Even so, stock levels at dealerships last month reached 3.5 million cars, or 57 inventory days, the highest since December 2023, according to data shared last week by the China Passenger Car Association.
Revisions by BYD include paring the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction to a model that was already the carmaker’s cheapest and one that had garnered global attention for its sub-$10,000 price tag. The Seal dual-motor hybrid sedan saw the biggest price cut at 34%, or by 53,000 yuan to 102,800 yuan.
In recent months, BYD has attempted to clear inventory of older models, including ones without the new driver assist features — which the automaker announced in February would be added to its models for free. The pivot hasn’t been without problems, further hurting the struggling dealerships it does business with.
“While some of these discounts have been in place since April, the official announcement sends a strong signal of how tough the end market is,” Morgan Stanley analysts including Tim Hsiao wrote in a note.
BYD’s latest cuts are expected to have a knock-on effect, as rival automakers further trim their prices, slicing deeper into already thin margins. The intense pricing pressure is straining many carmakers’ bottom lines, leading to mounting financial losses and industry consolidation.
“We anticipate peers to follow BYD’s price cut,” analysts at Citi Research wrote, noting that Chongqing Changan Automobile Co. announced a cash discount of 25,000 yuan for its Deepal S07 model over the weekend while Zhejiang Leapmotor Technologies Ltd. adjusted prices for its C16 full-size crossover sport utility vehicle and mid-sized SUV C11.
Citi estimated that after the weekend’s discounts, BYD dealership traffic may have surged between 30% to 40% week-on-week.
Should that foot traffic translate into sales, BYD’s May volumes could keep their upward trajectory. The Shenzhen-based group posted its best month of sales yet for 2025 in April, a further sign that despite the broader industry pain, it’s on track to hit its full-year target of 5.5 million deliveries.
BYD is also gaining ground overseas. It sold more EVs in Europe than Tesla Inc. for the first time last month, overtaking the American brand that long led the continent’s EV segment.
Thanks to BYD’s vertically integrated supply chain — it makes its own batteries and many of its own semiconductors — and domestic scale, which helps reduce production costs, the impact of China’s car price wars on its balance sheet is more muted than for some other automakers.
Its gross margin for the quarter ended March 31 was around 20% versus about 16% for Tesla, for example. And BYD’s net income in the first quarter jumped to 9.15 billion yuan, overtaking Tesla on another key metric.
