Hong Kong: Shares of Chinese electric vehicle giant BYD slumped as much as 7.87% on Monday after the company reported a sharp decline in quarterly profit, underscoring the intensifying price war in China’s EV market.
Profit slump despite revenue growth
BYD posted a net profit of 6.36 billion yuan ($891 million) for the June quarter, down 30% year-on-year, according to data from LSEG. The decline came even as the automaker’s revenue rose 14% year-on-year to about 201 billion yuan, helped by strong growth in overseas sales.
The impact of China’s EV price war
In its filing, BYD attributed the profit squeeze to “increased price competition and frequent occurrences of excessive marketing” in China’s EV space, which it said had created an “adverse periodic impact” on the industry.
The broader backdrop reflects a bruising domestic market, where the average retail car price in China has fallen by nearly 19% over the past two years to about 165,000 yuan ($22,900), according to Nomura, citing Autohome Research Institute data.
The aggressive price cuts, led by Tesla and quickly matched by Chinese rivals including BYD, have put heavy pressure on margins, forcing automakers to prioritize market share over profitability.
Stock reaction
Investors reacted swiftly to the results, sending Hong Kong-listed BYD shares down nearly 8% in Monday’s trading session. The decline reflects concerns about how long the company can sustain its growth trajectory under mounting price pressures.
Outlook
Despite the short-term hit, BYD’s continued push into overseas markets offers a growth cushion. The company has been expanding aggressively in Europe, Southeast Asia, and Latin America, aiming to diversify beyond China’s increasingly competitive EV battlefield.
Still, with price wars showing no signs of easing, analysts suggest the company may face further earnings volatility in the coming quarters.
