Chinese automakers’ shares continue to slide amid concerns of a price war and increased regulatory scrutiny. The decline follows BYD’s recent price cuts on electric and plug-in hybrid models, which were announced last week.
BYD shares fell as much as 4% Tuesday, while Geely Automobile, Great Wall Motor Co, and Li Auto also declined. Analysts say investors are turning cautious about stiffer competition in the sector.
The Chinese commerce ministry is reportedly meeting industry bodies and automakers to address a practice of marking cars as sold to meet sales targets, which could lead to price war fears. BYD’s price cuts have raised concerns among analysts, with some predicting a 30% spike in footfall at its dealership stores between May 24 and 25.
However, Citi analysts expect “robust sales growth” for new energy vehicle companies with prices below 200,000 Chinese yuan due to relatively mild competition. The sector’s profitability may remain under strain in the near term, but analysts are not concerned that BYD’s price cuts would erode its competitors’ market share.
Meanwhile, analysts from Morningstar predict that BYD’s vehicle margin will be under pressure in the short term, driven by the need to hit sales targets. They also believe that the company’s battery cost will stay low, allowing it to offset the impact of price competition.
Source: https://www.cnbc.com/2025/05/26/chinas-byd-sees-shares-plunge-8percent-as-ev-maker-cuts-prices.html