China’s industry giant BYD is under intense pressure. A renewed production cut demonstrates that the price war is leaving deep scars in its domestic market. Although Western manufacturers often admire the company’s success, its success story in electric mobility is faltering.
Profit decline despite rising sales
BYD published its quarterly figures at the end of last week. For the first time in three and a half years, it reported a significant decline in profits. Earnings amounted to approximately €770 million – almost 30 percent less than in the same period last year. At the same time, the company achieved a 23.3 percent increase in sales and a 13.8 percent increase in profit in the first half of the year. This discrepancy highlights the uncertainty in the market.
The stock market also reacted: Shares of battery producers and electric car manufacturers rose noticeably. The reason for this is the intervention of the government in Beijing. The Ministry of Commerce announced stricter rules against dumping prices and false advertising. The goal is to curb the ruinous price war and regulate competition.
Production Cuts as a Warning Signal
The production figures demonstrate the explosive nature of the situation even more clearly than the financial data. In August, 353,090 vehicles rolled off the assembly line, including electric cars and plug-in hybrids. This represents a decrease of 3.78 percent compared to the previous year. Production had already declined by 0.9 percent in July. This resulted in further production cuts.
This is the first cut since 2020, when the pandemic hit the industry. The decline in sales is particularly problematic: In August alone, sales in China plummeted by 14.5 percent, reaching just 292,813 vehicles. This puts BYD in the midst of a sales crisis that has been ongoing for four months.
Sales target slipping out of reach
In the first eight months, BYD was only able to achieve just over half of its annual target. Analysts subsequently reduced their forecasts. The sales crisis demonstrates the dangers of the price war in electric mobility. Even market leaders are under massive pressure when price wars erode margins.
At the same time, Western manufacturers view the development with mixed feelings. On the one hand, BYD is still considered a benchmark for efficiency and growth, but on the other hand, the current situation shows that even industry giants are revealing weaknesses. Production cuts, a sales crisis, and declining profits are not mere side notes, but serious warning signs.
Government Strengthens Regulation
Beijing wants to prevent an uncontrolled price war from destabilizing electric mobility. Measures against dumping prices are intended to create fair conditions. However, this approach could place even greater strain on smaller suppliers.
The situation remains tense for BYD. While the company has enormous production capacity, further production cuts cannot be ruled out. Competition is intensifying, the sales crisis continues, and the decline in profits is placing additional constraints. Whether the company can maintain its position as an industry leader now depends heavily on the coming months.