Shares of Chinese electric-vehicle (EV) firm BYD fell sharply on Monday following a series of price cuts across its model lineup, triggering investor concerns over rising competition and the prospect of a wider price war.
On May 23, BYD took to its official Weibo account to announce temporary discounts on 22 of its electric and plug-in hybrid vehicles through June 30. The Seagull hatchback, for example, saw its price slashed by roughly 20% to 55,800 yuan (about $7,780), while the Seal dual-motor hybrid sedan fell by some 34% to 102,800 yuan.
BYD slashes prices to drive demand
Earlier this year, BYD had already trimmed the starting prices of its Han sedans by 10.35% and its Tang SUVs by 14.3%, as part of its ongoing strategy to stimulate demand.
In early trading, BYD shares listed in Hong Kong dropped 6.53% to HK$434.80, and those on the Shenzhen exchange fell 3.89% to RMB 389.25. At their steepest intra-day decline, shares in Shenzhen were down over 8.25%, erasing gains from a recent record high.
Analysts point to swelling dealer inventories as the key driver behind the aggressive promotional push. According to a Deutsche Bank note released on May 24, BYD’s dealer stocks swelled by around 150,000 units in the first four months of 2025, equivalent to nearly half of one month’s retail sales, leaving inventories at a three- to four-month high, which may be the upper limit dealers can sustain.
The bank’s research team, led by Wang Bin, suggests that the company’s ambitious target of selling 5.5 million vehicles this year, a 30% increase on 2024, has so far outpaced actual retail growth, which reached only 15% year-on-year through April. To alleviate excess stock, BYD has rolled out deeper and broader discounts.
This has become the latest trend across China’s electric-vehicle sector. On Monday, shares in Geely Automobile plunged 7.3%, Great Wall Motor fell nearly 3%, Li Auto lost about 4.9%, and Xpeng slid 4.2%. Investors are growing cautious as the pricing skirmish threatens margins and could force rivals to follow suit.
Other EV makers replicate BYD’s strategy
Indeed, within days of BYD’s announcement, other manufacturers announced their own markdowns. Dongfeng Motor cut the starting price of its eπ 007 sedan from RMB 132,000 to RMB 120,000, trimming 9%. IM Motors reduced its LS6 electric SUV’s base price to RMB 194,900 through June 30, additionally allowing buyers to claim the national trade-in subsidy.
Leapmotor announced a limited-time drop on its entry-level C16 extended-range electric SUV from RMB 155,800 to RMB 111,800, and on the C11 EREV variant from RMB 148,800 to RMB 103,800, for purchases made before June 8.
Still, some strategists see an opportunity rather than a threat for the broader new-energy vehicle (NEV) industry. Citi analysts observed that following BYD’s latest cuts, foot traffic at its dealerships surged by an estimated 30% to 40% between May 24 and 25 compared with the previous weekend.
Citi’s team maintains that BYD’s aggressive pricing may actually accelerate market expansion rather than simply siphon away its rivals’ share.
Already, the company has outpaced Tesla in European sales for the first time. According to data tracked by JATO Dynamics, in April BYD registered 7,231 fully electric cars across Europe, which was ahead of Tesla’s 7,165. Europe has long been a territory for Tesla, yet BYD only entered that same market in late 2022.
Now, with competition intensifying in the EV market with Xiaomi recently announcing its entry too, investors are waiting to see if the huge discounts will drive growth or result in a downturn in valuations across China’s EV market.
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