Hong Kong-listed shares of Chinese electric vehicle giant BYD plunged nearly 8% on Monday after the company reported its first quarterly profit decline in more than three years, underscoring the growing toll of an aggressive domestic price war.
The Tesla rival said net profit for the April-June quarter fell 30% year on year to 6.36 billion yuan ($891 million), according to data from LSEG. This came despite a 14% jump in revenue to 201 billion yuan, buoyed by stronger overseas sales.
In its mid-year filing, BYD acknowledged that “increased price competition and frequent occurrences of excessive marketing” had “exerted an adverse periodic impact on the development of the industry.”
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
The Chinese EV market has been gripped by successive discount battles since early 2023, as carmakers slash prices to attract buyers in an increasingly crowded field. Retail car prices in China have dropped about 19% over the past two years, now averaging 165,000 yuan ($22,900), according to a Nomura report citing Autohome Research Institute data.
Authorities in Beijing have warned manufacturers against fueling excessive price cuts. In May, regulators pledged to punish companies engaged in “unfair competition,” reflecting official concerns that the race-to-the-bottom threatens the health of the industry.
BYD’s Sales and Production Struggles
While BYD’s first-half results showed resilience — with net profit rising nearly 14% to 15.5 billion yuan and revenue up 23% to 371.3 billion yuan — cracks are emerging in its dominant position.
The company’s production fell for the second straight month in August, marking its first consecutive monthly contraction since 2020. BYD produced 353,090 electric and plug-in hybrid vehicles globally last month, down 3.78% from a year earlier, following a 0.9% drop in July.
China sales fell even more sharply, sliding 14.3% year on year in August to 292,813 vehicles — the fourth consecutive monthly decline. Domestic sales account for nearly 80% of BYD’s total, making the slowdown particularly damaging.
Reuters reported in June that BYD had begun cutting shifts at some factories in China and postponed adding new production lines, signs that the company is recalibrating after years of breakneck expansion.
As of August, BYD had achieved just 52.1% of its full-year sales target of 5.5 million vehicles. Analysts at China Merchants Bank International have since cut their forecast by 5% to 4.9 million, citing the company’s “more cautious” approach to inventory.
EV Shift and Global Expansion
One bright spot has been BYD’s shift away from plug-in hybrids (PHEVs) toward fully electric vehicles. Since April, the company has consistently produced and sold more EVs than PHEVs. In August, EV production rose 26% year on year, while sales jumped 34.4%.
Global markets are also becoming more important to BYD’s growth story. The company has opened showrooms across Europe and rolled out models at competitive prices. In July, BYD registered over 13,000 new vehicles in Europe, up 225% from a year earlier, according to the European Automobile Manufacturers Association.
Still, overseas growth has not fully offset the drag at home. “China remains the backbone of BYD’s business,” one Hong Kong-based analyst told Reuters. “Unless domestic sales stabilize, the company will find it difficult to meet its annual targets despite international expansion.”
The profit drop — the company’s first in three and a half years — is being seen by analysts as a turning point. With cutthroat competition at home, regulatory scrutiny over pricing, and production showing its first signs of contraction since 2020, BYD faces its toughest balancing act yet: protecting profitability without losing its edge in the race for global EV dominance.