Shares of Chinese electric vehicle giant BYD fell sharply on Monday after the company revealed declining earnings pressured by China’s intensifying competition. BYD announced its quarterly profit slipped 30% yearly to 6.4 billion yuan, signaling the first decline over three years.
The profit drop reflects increasing price cuts across China’s crowded EV sector, where rivals Nio, XPeng, and Tesla aggressively slash prices. Production reached 353,090 electric and hybrid vehicles in August, down 3.78% annually, marking the second consecutive month of reductions.
Chinese sales dropped 14.3% to 292,813 vehicles during August, down 3.78% annually, marking the second consecutive reduction month. Chinese sales fell 14.3% to 292,813 cars during August, continuing a four-month decline, though global demand helped stabilize overall performance.
Despite BYD’s target of 5.5 million sales for 2024, the company achieved only 52.1% of that goal by August. Executives cited increased price competition and industry malpractices such as excessive marketing and heavy subsidies, straining the sector’s long-term financial sustainability.
Beijing has urged automakers to ease discounts to prevent oversupply, warning that excessive price wars risk destabilizing China’s fragile post-pandemic economic recovery. Average car prices have fallen nearly 19% over two years, and industry observers are warning of structural risks facing automakers and suppliers.
China Merchants Bank International cut BYD’s sales forecast by 5% to 4.9 million vehicles, citing caution about inventory management. Analysts suggested investors remain skeptical of BYD’s share price, which initially fell 8% on Monday before recovering slightly later in Hong Kong.
Industrial policy experts said the profit drop showed even dominant players remain vulnerable in volatile markets where consumer incentives reshape demand. BYD surpassed Tesla in annual revenue this year largely due to strong hybrid sales across China, Europe and emerging Asian markets.
