Shares of Chinese electric vehicle giant BYD Co. (1211.HK) have fallen over 17% in the past week, as investor concerns mount over the sustainability of its aggressive pricing strategy and the potential for increased regulatory intervention.
The decline follows critical commentary from Chinese state media and industry regulators. The People’s Daily, a key publication aligned with the Chinese Communist Party, warned that unchecked price competition could destabilize supply chains and damage the global perception of Chinese manufacturing. While no companies were named, the message was widely interpreted as a response to the intensifying EV price war. China’s main automotive industry association also issued a statement cautioning against “vicious competition,” which it said could erode profit margins and compromise product quality. The Ministry of Industry and Information Technology echoed these concerns and signaled plans to strengthen oversight of the sector.
BYD has been at the forefront of recent price cuts, slashing prices by up to 34% in May. While this move boosted showroom traffic Citigroup analysts estimate a 30–40% week on week increase it has also raised questions about long term profitability. Despite delivering a record 382,476 vehicles in May, BYD’s year-on-year growth rate of 15% was its slowest since mid-2020, excluding seasonal dips.
To meet its ambitious 2025 sales target of 5.5 million units, BYD will need to average over 530,000 monthly deliveries for the remainder of the year, according to Morgan Stanley analysts. The fourth quarter typically sees a seasonal boost in sales, but the pressure remains high.