BYD profit falls 30% as China's EV price war squeezes margins

Chinese electric-vehicle maker BYD reported a sharp decline in quarterly profit and saw its stock tumble as an escalating price war in China’s car market put pressure on margins.

BYD said its net profit for the three months to the end of June fell to 6.4 billion yuan ($900m; £660m), down about 30% from a year earlier. The company reported the results on Friday, and shares in the Shenzhen-based manufacturer slid as much as 8% on Monday before recovering slightly through the trading day in Hong Kong.

In a regulatory filing, BYD said “increased price competition” among China's EV brands had affected the industry and warned that competition in the sector had reached a “fever pitch”. The company also cited “industry malpractices... [like] excessive marketing” as a factor disrupting the market.

Automakers across China have aggressively cut vehicle prices to attract buyers, with local rivals such as Nio and XPeng and U.S. entrant Tesla all announcing discounts in recent months. Industry players have also offered dealer subsidies and zero-interest loans to buyers, measures that have intensified competition and squeezed profitability across the supply chain.

The aggressive discounting has prompted public warnings from Beijing, which has urged automakers to halt steep promotions. BYD said the intensifying price pressure and promotional activity had materially affected its results for the quarter.

Investors reacted sharply to the earnings update. BYD shares opened lower in Hong Kong and at one point fell around 8% before trimming losses later in the session. The company did not signal immediate changes to its broader strategy in the filing, but its comments highlight the difficulties facing manufacturers operating in an increasingly crowded domestic market.

The results follow a period of rapid expansion and heavy competition in China's electric-vehicle market, where multiple domestic brands and foreign entrants are vying for market share. While growth in sales volumes has continued, the latest quarter showed the tension between volume expansion and margin preservation as companies use price reductions and financing incentives to maintain sales momentum.

BYD’s earnings release and the share reaction underline the shifting dynamics of China’s EV industry, where intense discounting and promotional spending have raised questions about long-term profitability for manufacturers and the stability of the market.

The company will face continued scrutiny from investors and regulators as the sector adjusts to heightened price competition and evolving consumer incentives. BYD’s July filing framed the challenge succinctly: aggressive competition and marketing practices are disrupting the industry and weighing on financial results.