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BYD’s Electric Price War: Shares Plummet Amid Deep Discounts as EV Sales Surpass Tesla in Europe

HomeBYD’s Electric Price War: Shares Plummet Amid Deep Discounts as EV Sales Surpass Tesla in Europe

BYD’s Electric Price War: Shares Plummet Amid Deep Discounts as EV Sales Surpass Tesla in Europe

BYD’s Electric Price War: Shares Plummet Amid Deep Discounts as EV Sales Surpass Tesla in Europe

Share Prices of Chinese Electric Vehicle Brand BYD Plunge Amid Fears of Price War in China's EV Market

The largest electric vehicle brand in China, BYD, experienced a sharp decline in share prices on Monday following the announcement of deep discounts across its models. The move has sparked concerns about a fresh price war in China's EV markets.

Market observers were quick to note that despite the significant drop, which saw shares tumble 8.6%, BYD remains up more than 50% year-to-date on the Hong Kong Stock Exchange. In comparison, rival US electric vehicle maker Tesla witnessed little change in its share price but is down 13% year-to-date.

Steep Discounts across BYD Models

BYD's aggressive pricing strategy has sparked concerns about a slowing demand for EVs amid persistent economic weakness and heightening trade tensions between the US and China. To put this into perspective, major competitors Geely, Great Wall Motor, and Xpeng saw their shares decline as much as 9% on Monday, with fears of deeper discounts squeezing profit margins in the sector.

The company announced it was offering a sweeping price reduction across its 22 electric and plug-in hybrid models. The reductions range from 10% to 30%, applicable until June 30th through official channels, including but not limited to those available on Chinese social media platforms like Weibo. This move is seen not just as an effort to boost sales but also a strategy aimed at shedding excess inventory of older models.

The Seal 07 DM-i model was the most significant hit with a discount coming in at CNY53,000 (approximately €6,460), representing a staggering 34% price cut. Analysts and experts are now observing this move closely for signs that it might precipitate broader sector-wide changes in pricing strategies as competition continues to heat up domestically.

  • Inventories at dealerships prior to the announcement: Approximately 150,000 units of older models accumulated during the first four months of 2025, which equates to roughly half a month's worth of retail sales, as per reports by CnEVPost.
  • Potential for increased sales through discounted prices:
    • An estimate by Citi analysts suggests that these price reductions could drive a weekly surge in sales ranging between 30% and 40%.

However, some counterbalances are at play. One of the key points is that BYD remains on an exceptionally strong growth trajectory, defying many market predictions. Its total sales for new energy vehicles (NEVs) have surpassed their levels from last year by a considerable margin.

One specific example illustrating this point perfectly involves Europe, where BYD registered over 7,231 battery electric vehicles across the continent in April—a staggering rise of no less than 169% on an annual basis. Conversely, Tesla experienced significantly lower sales numbers, highlighting what might be described as growing anti-Tesla sentiment partly due to its high-profile CEO Elon Musk’s involvement in polarizing subjects.

As mentioned earlier BYD reported a net income of CNY9.15 billion (approximately €1.11 billion) on top of achieving a 20% gross profit margin during the first quarter. These figures place it ahead of Tesla, which only managed a gross margin of around 16%.

Advancements and Future Plans

  • Competitive Positioning: BYD’s adoption of advanced technologies is one notable aspect of its growth strategy. For instance, its collaboration with DeepSeek to use R1 AI model for driver-assistant systems underscores an aim to rival market leaders without the associated costs.

    • Moreover with CATL as competitors, this places them well in a more strategic and cost-effective position vertically integrated for maximum efficiency.

  • Regional Focus: Given its structure and current operational set-up BYD will likely withstand US trade tariffs better than others in the sector. The reason, it doesn’t export passenger vehicles to the United States instead having regional focus points where they are relatively less exposed.

    • Specifically speaking, there’s a growing thrust towards expanding in South America as well but with significant plans coming together regarding international growth including Southeast Asia where BYD has been aggressively promoting operations.

BYD remains highly competitive within China despite ongoing market fluctuations and a complex geopolitical backdrop.