TLDR
- BYD shares dropped over 17% in the past week as Chinese government criticizes “rat-race competition” and warns against price wars
- Company cut prices up to 34% last month, triggering similar moves from rivals like Leapmotor and Geely
- BYD sold 382,476 vehicles in May with slowest growth since August 2020 at 15% year-over-year
- Plans to enter Japan’s $18 billion kei car market in 2026 with low-cost electric minicar
- Company needs to average 534,000 monthly sales to hit 5.5 million vehicle target for 2025
BYD Co. shares have tumbled more than 17% over the past week. The Chinese electric vehicle maker faces mounting pressure from government officials over its aggressive pricing strategy.
The sell-off comes after China’s Communist Party newspaper criticized the industry’s “rat-race competition.” The People’s Daily warned that price wars could damage supply-chain security without naming specific companies.
China’s automobile industry association also voiced concerns over the weekend. Officials warned against “vicious competition” that hurts profit margins and product quality.
The Ministry of Industry and Information Technology backed this stance. The government agency will step up measures to root out unhealthy competition in the auto sector.
BYD has been at the center of China’s brutal price war. The company slashed prices up to 34% last month, forcing rivals to follow suit.
Competitors including Zhejiang Leapmotor Technology and Geely Automobile Holdings made similar cuts. Citigroup analysts estimate BYD’s dealership traffic surged 30% to 40% week-on-week after the discounts.
Sales Performance Under Pressure
Despite the price cuts, BYD’s growth is slowing. The company sold 382,476 vehicles in May, its best month of 2025 so far.
However, year-over-year growth of just 15% marked the slowest pace since August 2020. The only exception was a delivery drop in February 2024 due to Lunar New Year holidays.
BYD has sold 1.76 million units so far this year. The company targets 5.5 million vehicles for the full year.
Morgan Stanley analysts calculate BYD needs to average about 534,000 units monthly for the remainder of 2025. This would be necessary to reach its ambitious annual goal.
The fourth quarter typically sees strong sales as carmakers clear inventory. This seasonal boost could help BYD close the gap.
Competition Benefits from Price War
The deep discounting appears to be lifting all boats in China’s EV market. Leapmotor sold 45,067 vehicles in May, jumping 148% year-over-year.
Geely Auto’s deliveries increased 46% to 235,208 units. Xpeng saw sales triple in May, driven by its mass-market MONA M03 model.
#Xpeng debuted its MONA M03 Max model, bringing premium AI-powered driving to the affordable electric vehicle market. Integrating Xpeng's Turing AI-assisted Driving System and the full-capacity AI Tianji System, the model perfectly appeals to young, style-savvy drivers. pic.twitter.com/RXqwkfDmXw
— Auto China (@AutoChinaNews) May 28, 2025
BYD’s battery electric vehicle sales of 204,369 last month topped its plug-in hybrid sales of 172,561. This marked only the second time pure EV sales led since early 2024.
The company is also expanding internationally. BYD delivered more than 89,000 units overseas in May, setting a new record.
Japan Market Expansion Plans
BYD is planning to enter Japan’s minicar market in 2026. The company will launch a low-cost battery-powered kei car targeting urban drivers.
Japan’s kei car segment was worth around $18 billion in sales last year. These lightweight minicars account for 40% of Japan’s overall car market.
The sector is currently dominated by Honda, Nissan, Toyota and Mitsubishi. BYD sees an opportunity as high fuel taxes and fewer gas stations favor electric alternatives.
Atsuki Tofukuji, president of BYD Auto Japan, told the Financial Times that kei cars fit Japanese lifestyles well. He compared them to the classic Austin Mini Cooper driven by Mr. Bean.
Few details about BYD’s kei car have been revealed. The vehicle’s range, appearance and price remain under wraps.
Japanese consumers may prove challenging to win over. Industry experts say local drivers tend to be loyal to domestic automakers and somewhat distrustful of Chinese brands.
Electric vehicle adoption remains slow in Japan. Fewer than 60,000 EVs were sold in 2024, representing just over 1% of the total market.
BYD targets selling half of its vehicles outside China by 2030. The company delivered more than 89,000 units internationally in May, its highest on record.
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