BYD Stock Takes a Hit as EV Price War Eats Into Profits

Shares of Chinese EV giant BYD sank nearly 8% in Hong Kong on Monday after the company reported its first quarterly profit drop in more than three years—proof that China’s bruising electric car price war is sparing no one, not even the industry leader.

Between April and June, BYD’s net profit fell 30% to 6.4 billion yuan ($895 million), missing analyst expectations. The company blamed “increased price competition” and “excessive marketing” in China’s crowded EV market, where rivals like Tesla, Nio, and XPeng have been slashing sticker prices to lure buyers.

The result: margins under pressure and investors bailing at the open—though shares clawed back some of those losses by the afternoon.

To keep cars moving, EV makers have been throwing out dealer subsidies, zero-interest loans, and deep discounts. The aggressive tactics have triggered a warning from Beijing, which urged automakers to cool the price war before it harms the broader economy.

Average car prices in China have already dropped about 19% in two years, now sitting at roughly 165,000 yuan ($23,000), according to industry data.

The profit slump comes even as BYD’s revenue jumped 14% year-on-year to 201 billion yuan, thanks to booming overseas sales. The Shenzhen-based company has rapidly expanded in Europe, Brazil, and Southeast Asia, even surpassing Tesla in annual revenue in 2024.

Still, BYD is only halfway to its ambitious target of 5.5 million car sales this year, delivering 2.49 million by the end of July.

Analysts say BYD’s stumble underscores the risks of China’s cutthroat EV market.

“Even the sector’s leader can’t win a price war,” said Prof. Laura Wu of Nanyang Technological University.

But not everyone sees gloom.

“They’ve had such a meteoric rise that it’s okay to have a bump in the road,” said Judith MacKenzie of Downing Fund Managers.

For now, BYD remains the world’s biggest EV maker. But with profits sliding and Beijing leaning on automakers to play fair, the road ahead looks a lot rougher than the smooth ride investors had gotten used to.

With input from BBC, CNBC, Reuters, Bloomberg.