BYD’s stock market fell 9% after it announced price cuts for several models

May 26, 2025:
- BYD’s Hong Kong-listed H shares plunged 8.38%, erasing over HK$10 billion in market value.
- Intraday declines: 6.53% in Hong Kong (to HK$434.8) and 3.89% in Shenzhen (to RMB 389.25), though closing figures may differ.
- Multiple sources confirmed an ~9% single-day drop, reversing gains from the previous week’s record highs.
May 27, 2025:
- Shares fell up to 4% intraday, closing 2.96% lower, marking a two-day cumulative decline of over 10% (Bloomberg, Tech in Asia).

Price Discounts and Competitive Pressures

On May 24–25, BYD announced price cuts of 10–30% across 22 pure electric and plug-in hybrid models (Ocean and Dynasty series), effective until June 30, 2025. Notable examples:

Seagull (Ocean Series): RMB 69,800 → RMB 55,800 (20% discount, ~$7,780).
Qin Plus DM-i (Dynasty Series): RMB 79,800 → RMB 63,800 (20% discount).
Seal 07 DM-i: Slashed by RMB 53,000 (~$6,460), a 34% price reduction.

Strategic Rationale:

Counter rising competition (Tesla, Li Auto, XPeng).
Address excess inventory: BYD dealer stocks rose by ~150,000 units in Q1 2025, equivalent to half a month’s retail sales (CnEVPost).

Analyst Outlook:
Citigroup estimates discounts could boost weekly sales by 30–40%, offsetting margin pressures. However, investors fear long-term profitability erosion.

Broader Market Reaction

BYD’s price cuts triggered a sector-wide selloff in Chinese EV stocks:

Geely Auto: Down over 9%.
Great Wall Motor: Fell 5%+.
Nio, XPeng, Li Auto: All declined, reflecting concerns over intensifying price wars and shrinking margins.

Strong Sales and Financials Contrast With Stock Volatility

Despite the selloff, BYD’s operational metrics remain robust:

Q1 2025 NEV Sales: 1,000,804 units (Jan: 300,538; Feb: 322,846; Mar: 377,420).
Revenue: RMB 170.36 billion ($23.25B), up 36.35% YoY.
Net Income: RMB 9.16 billion ($1.26B), more than doubling YoY.

Global Expansion and Tech Advancements

Europe Milestone: Outsold Tesla in April 2025 with 7,231 BEVs vs. Tesla’s 7,165.
2025 Targets: 5.5M global sales (800,000+ overseas).
Tech Upgrades:
- Integrating DeepSeek AI into ADAS to rival Tesla’s FSD.
- Making autonomous driving a standard safety feature across models, including budget cars (<$10,000).

Investor Sentiment and Risks

Bull Case: Strong sales growth, global market penetration, and tech leadership.
Bear Case: Margin compression from price cuts, inventory glut, and geopolitical tensions (U.S.-China trade).

Conclusion: While BYD’s aggressive pricing aims to solidify its EV dominance, the stock’s sharp decline underscores investor skepticism about sustainability. The company’s global ambitions and tech investments could redefine its trajectory, but near-term volatility is expected.