Shares in Chinese electric vehicle maker BYD (BYDDY) spluttered lower today as investors around the world started to fret about its ability to compete in the increasingly congested marketplace.
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Hong Kong Heartache
The company’s shares have collapsed by over 30%, equating to a $45 billion stock selloff, in the Hong Kong market from the all-time high it reached just four months ago. Analyst sell ratings on BYD have also surged to the highest level since 2022.
Its U.S. listed stock, down 2% today, is off nearly 20% in the last three months.
Analysts believe that investors are quickly losing patience with the company’s deep discounting strategy to fight off competition from domestic competitors such as Xpeng (XPEV) and U.S. group Tesla (TSLA).
Despite its use of discounts it has performed poorly against those peers in recent months – see below:
It, and its Chinese peers, are also facing pressure from the Chinese government on so-called involution damaging the EV sector.
Involution is the practice of investing more effort and money for diminishing returns. So, in an EV context investing in upping production at the same time as cutting prices.
“While I believe investors retain a positive long-term view, there is a real concern around BYD’s aggressive ‘market share gain by pricing pressure’ strategy in the anti-involution context,” said Kevin Net, head of Asian equities at Financiere de L Echiquier. “In the short term, this should still weigh on both topline and margins.”
Big Stretch
BYD recently reported a disappointing Q2 2025, with its net profit declining for the first time in over three years.
The company made $27 billion in revenue during the quarter, falling behind the $28.8 billion consensus forecast. Furthermore, BYD recorded earnings of 11 cents per share, as opposed to analysts’ expectations of earnings of 16 cents per share.
BYD now expects to deliver 4.6 million vehicles this year, a huge drop from its earlier target of 5.5 million. To meet the goal, it must deliver some 1.7 million units in the last four months of the year.
If it can make that, then the unveiling of new models in the first quarter of 2026 could help reboot its share price.
“No OEM could keep their product cycle strong forever — even BYD cannot,” said Xiao Feng, co-head of China industrial research at CLSA Hong Kong.
It is also likely to keep the foot down on its international expansion, including the U.K. and Brazil. Its overseas volume may reach 900,000 to 1 million units in 2025, exceeding management’s 800,000 target at the beginning of the year, according to Goldman Sachs Group analysts.
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