5 days ago
Tesla's Top Rival BYD Ignites EV Pricing War in China
BYD has reignited China's electric vehicle (EV) price war after lowering the price of 22 all-electric and plug-in hybrid vehicles by up to 34% through the end of June. Subsequently, shares of many Chinese EV makers, including BYD, tumbled. The Seal hybrid sedan saw the most significant price cut in BYD's lineup at 34%, lowering its starting cost to $15,000 or 102,800 yuan.
However, BYD's price changes don't impact its luxury inventory, which includes the Denza FangChengBao and Yangwang lines. China's IM Motors, Leapmotor, and Geely's Galaxy have also announced price cuts in response to BYD's move. Other key players, like XPeng, Nio, and Li Auto, haven't yet slashed any price tags. European automakers like Volkswagen, BMW, and Mercedes-Benz will likely see further EV sales declines in China after BYD's bold move, given their reluctance to enter the country's new energy vehicle (NEV) price war. Tesla China registrations have also lagged in Q2.
BYD has been considered a leader in China's EV price war with its in-house battery production and ability to get volume discounts from suppliers. The automaker is one of China's three profitable EV makers among the country's 50 or so electric car manufacturers. According to Investor's Business Daily, BYD introduced its latest price cuts in response to rising dealer inventories, causing some to wonder whether China's NEV push is losing steam. Chinese officials have also been investigating the possibility of zero-mileage car sales, where automakers pad their delivery numbers by reporting vehicles as sold that are being distributed to finance companies and used auto dealers, Clean Technica reports. In other words, Chinese automakers might be recording zero-mileage cars as sold when end users haven't purchased them. A slowdown in NEV sales would be a significant concern among Chinese officials regarding the country's economic goals and environmental sustainability.
New price cuts from BYD also stem from the automaker's desire to reach 5.5 million sales this year, representing a 1.5 million increase from 2024. BYD's U.S. stocks declined 9.75% on Tuesday after the company's pricing announcement, while XPeng, Nio, and Li Auto's U.S. shares fell 3.8%, 4.1%, and 2.6%, respectively, according to Investor's Business Daily. Close to half of all China's new car sales are all-electric and PHEV, Electrek reports. By comparison, less than 10% of U.S. new vehicle sales are NEVs. Victor Sun, senior equity analyst at Morningstar, said he expects BYD to: "Offset the impact [of its discounts] via larger sales scale and [its] battery cost staying low," according to CNBC.
Market reactions to BYD's discounts reflect how investors are nervous about an escalating EV price war in China and increased scrutiny from the country's regulators regarding sales numbers. In April, China's EV discounts reached a record high of 16.8%, and it appears this figure will climb higher in May. BYD, Seres, and Li Auto are the only three Chinese EV makers currently profitable, and an intensifying price war is setting the stage for an industry shakeout where smaller competitors will likely go under or get bought out by competitors.
Copyright 2025 The Arena Group, Inc. All Rights Reserved.
