BYD’s aggressive discount campaign is causing a stir in China’s EV market, prompting competitors to slash prices and sparking concerns of an industry-wide price war, according to Nikkei Asia.
Starting in January, BYD has been offering a series of time-limited discounts. Its most recent promotion, running until June, includes price cuts of up to 34% on 22 EV and hybrid models, with the Seagull model now available for just $7,700. Vincent Sun from Morningstar expressed concerns that this could lead to an extended period of price competition. “I believe the main motivation behind this is achieving sales targets,” he stated.
BYD has set a goal of selling 5.5 million vehicles by 2025, with 800,000 of those targeted for overseas markets. However, the company’s stock dropped over 8% on Monday and continued to decline following the announcement of the discounts.
Wei Jianjun, chairman of Great Wall Motor, hinted at a growing debt issue within the industry, stating, “The Evergrande of the automotive industry already exists; it just hasn’t collapsed yet.” Many interpreted this as a reference to BYD, which had a debt ratio of 70.7% as of March. In response, BYD’s Li Yunfei posted a cryptic message on social media: “A dog can bite a person! But a person cannot bite a dog!”
Nikkei reports that other automakers quickly followed BYD’s lead. Geely’s Galaxy brand introduced discounts of up to 20,000 yuan, while Changan and Leapmotor also reduced prices. A surplus of inventory is partially responsible, with China having 3.5 million unsold vehicles in April, representing a 57-day supply – the highest since late 2023. BYD alone reported 154.4 billion yuan in inventory, a 33% increase from the previous quarter.
Despite its current position, BYD is facing pressure from competitors. Oscar Wang from Haitong remarked that rivals are catching up in terms of technology and pricing. “While relying on price wars in the long run may diminish brand value, it can help secure market share in the short term,” he explained.
Eugene Hsiao from Macquarie observed, “We believe that BYD is aiming to maintain its dominance in the local EV market while also compelling competitors to match their prices, potentially hastening future consolidation.”
The Chinese government has signaled support for mergers among state-owned auto companies, and Geely recently announced its intention to privatize Zeekr to reduce overlapping costs. S&P Global cautioned that “many entities [are] on an unsustainable path” and predicted “a widespread consolidation” on the horizon. “For many companies, a merger or some form of partnership will be essential for survival.”
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