Shares of Chinese electric carmaker BYD dropped by nearly 8% on Monday after the company reported weaker profits, blaming a fierce price war in China’s auto market. On Friday, BYD said its net profit for April to June fell 30% from last year to 6.4bn yuan ($900m; £660m). The company cited intense competition among Chinese EV makers, as well as rivals such as Tesla, Nio, and XPeng, all of which have been cutting prices to attract buyers.
BYD’s stock fell at the Hong Kong open but later regained some ground. The company described the market as being at a “fever pitch”, saying that practices such as heavy marketing and deep discounts are hurting the industry.
Many EV brands have been offering dealer subsidies and zero-interest loans, which have raised concerns in Beijing. Authorities have urged carmakers to ease back on aggressive price cuts to avoid destabilising the economy. Industry data shows that the average car price in China has dropped about 19% over two years, now standing at around 165,000 yuan ($23,100; £17,100).
By the end of July, the business had only sold 2.49 million automobiles worldwide, falling short of its 5.5 million sales goal for this year. According to Singaporean industrial policy expert Laura Wu, BYD’s “surprising” result shows that even the leader of China’s EV industry won’t inevitably prevail in a “cut-throat” pricing battle.
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