BYD reported net profit of 6.4 billion yuan for April to June, a 30% year-on-year decline attributed to intensified price competition in China's EV market. The company's Hong Kong-listed shares tumbled as rivals Nio, XPeng and Tesla engaged in steep discounting, subsidies and zero-interest loans to attract buyers. BYD described the competitive environment as a "fever pitch" and blamed industry malpractices such as excessive marketing for market disruption. Average car prices in China have fallen about 19% over two years to roughly 165,000 yuan. BYD's global sales target of 5.5 million remains distant after 2.49 million sold by end of July.
Shares of Chinese electric vehicle maker BYD slid by as much as 8% on Monday after it reported a drop in profit because of a price war in China's car sector. The carmaker had on Friday reported that its net profit fell to 6.4bn yuan ($900m; 660m) between April and June, down 30% from a year earlier. BYD said in its filing that "increased price competition" among China's EV brands had impacted the industry.
Competition in China's car sector has reached a "fever pitch", said BYD in its statement. It said "industry malpractices... [like] excessive marketing" played a part in disrupting the market. EV makers have subsidised car dealers and offered zero-interest loans to buyers as the industry becomes increasingly cutthroat. It has prompted warnings from Beijing, which urged automakers to stop the aggressive discounts in order to protect the economy.
Average car prices in China have fallen by around 19% over the past two years, currently standing at around 165,000 yuan ($23,100; 17,100), according to industry estimates. And despite significant sales abroad, BYD's earnings fell short of analysts' estimates for a modest increase. The company targeted global sales of 5.5 million cars this year, but it has sold just 2.49 million by the end of July.
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