Chinese electric vehicle giant BYD Co. led a slump in Hong Kong stocks on Monday after announcing sweeping price cuts of up to 34% for its models in China. The auto manufacturer has reduced prices on 22 of its electric and hybrid vehicles until the end of June, fueling concerns about intensifying competition in the sector.
Shares of BYD fell as much as 8.3%, while peers Li Auto Inc., Great Wall Motor Co., and Geely Automobile Holdings Ltd. dropped more than 5% amid worries about dwindling consumer demand and broader economic challenges in China. The move has sparked a price war, with rival automakers expected to follow suit.
BYD’s discounts have already started impacting sales, particularly among older models without new driver assist features, which the company will offer for free starting this month. Analysts at Morgan Stanley warn that the intense pricing pressure is straining many carmakers’ bottom lines and leading to mounting financial losses and industry consolidation.
Despite this, BYD remains on track to meet its full-year sales target of 5.5 million deliveries, with May volumes showing an upward trend. The company has also gained ground overseas, selling more EVs in Europe than Tesla Inc. for the first time last month, thanks to its vertically integrated supply chain and domestic scale.
BYD’s financial performance has been less affected by the price cuts, with a gross margin of around 20% compared to about 16% for Tesla. The company’s net income in the first quarter jumped to 9.15 billion yuan, overtaking Tesla on another key metric.
Source: https://fortune.com/asia/2025/05/26/chinese-ev-stocks-tumble-after-byd-slashes-prices-as-much-as-34