BYD share tumble as China’s EV price war slashes profits

China’s EV war has dealt a blow to Australia’s new favourite automaker after a shock result that has stunned the industry.

Shares in Chinese electric vehicle giant BYD have taken a hit after the company revealed a sharp drop in quarterly profits.

The Shenzhen-based automaker, which has fast become a top player in Australia thanks to models like the Atto 3, Sealion and Seal, reported a net profit of 6.4 billion yuan (approximately $1.3 billion AUD) between April and June, down 30 per cent compared with the same period last year.

BYD blamed “increased price competition” in the Chinese electric vehicle (EV) market, with rivals including Tesla, Nio and XPeng slashing prices to gain buyers.

The battle for new buyers has seen automakers slash price, subsidise dealers and offer zero-interest loans.

Chinese buyers are seeing record discounts as automakers slash prices. (Photo by Hector RETAMAL / AFP)

Concerned about the impact on growth, Beijing has stepped in, urging automakers to rein in discounts to avoid destabilising the economy.

Average car prices in China have already fallen approximately 20 per cent over the past two years to about 165,000 yuan ($23,100 AUD).

Despite its strong global demands and rapid rise in Australia, BYD’s earnings fell short of analyst expectations.

By the end of July, the company had sold 2.49 million cars worldwide, below its target of 5.5 million for 2025.

Singapore’s Nanyang Technological University industrial policy expert Professor Laura Wu told the BBC, BYD’s “surprising” performance shows that “even the leader of China’s EV sector won’t necessarily win from a cutthroat price war.”

BYD overtook Tesla to become the world’s largest EV automaker last year. (Photo by AFP) / China OUT

She added that the “drop in stock price trading” earlier this week “signals investors’ disappointment”, and warned that Beijing faces a major challenge in ending the price war.

“Price cuts may benefit the consumers, but they risk creating an oversupply of Chinese EVs in the long run,” Professor Wu told the BBC.

Downing Fund Managers head of UK investment firm Judith Mackenzie told the BBC: “They’ve had such a meteoric rise that it’s okay to have a bump in the road.”

Originally published as BYD share tumble as China’s EV price war slashes profits