BYD (BYDDY or BYDDF), China’s No. 1 selling car brand tumbled 9.3 at the close today%, while peers Li Auto, Great Wall Motor and Geely Automobile Holding dropped more than 5% on an intensifying price war in the electric vehicle sector.
BYD is offering discounts on 22 of its electric and plug-in hybrid models that it sells in China until the end of June.
Thee problem is that while EV sales have reached new annual highs, growth has been decelerating.The problem is especially acute in China, where a broad economic slowdown has cut sales growth. Inventory 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.
BYD has pared the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction for 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.
BYD’s latest cuts are likely tolled to consolidation in the sector as rival automakers further trim their prices, slicing deeper into already thin margins. “We anticipate peers to follow BYD’s price cut,” analysts at Citi Research wrote, noting that Chongqing Changan Automobile 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.
BYD looks poised to come out of this bloodbath at the top of the sector both in China and internationally. BYD 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 TSLA) 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 its scale in China, which helps reduce production costs, the impact of China’s car price wars on BYD’S balance sheet is more muted than for some other automakers. The company’s 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.
Which doesn’t mean, as today’s drop should remind investors, that BYD’s shares will escape the carnage. (Even after today’s route BYDDF is up 55.9% for 2025 to date.)
I think that thesis a stock to own for the long-term on its cost advantage and technology lead in the sector–which is why the stock is a member of my long-term 50 Stocks Portfolio. But I think the short-term price war as well as global trade wars mean tough going for the stock over the next year or so–which is why I sold the shares out of my 12-18 month Jubak Picks Portfolio. I would think of adding to positions a year from now.
