BYD (OTC:BYDDY) Braces for EV Price War with Supplier Price Cuts

The EV industry in China could soon see an intense price war. In fact, BYD Co. (OTC:BYDDY) is preparing for this price war by urging its suppliers to accept price cuts starting next year. An email circulating on Chinese social media, cited by Bloomberg, revealed that the Shenzhen-based automaker is requesting a 10% price reduction from one of its suppliers beginning in January.

BYD Responds to the Email

In response to the email, BYD’s public relations and branding director, Li Yunfei, clarified in a Weibo post that price negotiations with suppliers are standard practice in the automotive industry. He explained, “We put forward price reduction targets to suppliers. They’re not mandatory requirements. We can negotiate.” This email indicates that BYD is focused on maintaining its edge amid a prolonged price war, which has resulted in the consolidation of Chinese EV players and placed smaller competitors under significant strain.

Western Automakers Are Tying Up with Chinese EV Players

While many Western automakers, including Volkswagen (OTC:VWAGY) and Stellantis (STLA), are forming partnerships with Chinese EV players like XPeng (XPEV) to navigate the challenging market dynamics, other premium EV brands like HiPhi and WM Motor are facing bankruptcy.

Amid these challenges, BYD has emerged stronger, leading industry-wide price cuts earlier this year to expand its market share and outpace rivals like Tesla (TSLA).

BYD Is Gaining an Edge Over TSLA

BYD is quickly gaining an edge over TSLA. In the most recent quarter, the company surpassed Tesla in revenue for the first time and achieved a gross margin of 21.9%, its highest in a year. The automaker has so far delivered around 3.2 million plug-in hybrid and electric vehicles this year, including a record 500,000 units in October.

Is BYD a Good Stock to Buy Now?

While none of the Wall Street analysts are covering BYD stock over the past three months, BYD has gained by more than 10% over the past year.