Chinese automaker BYD’s (BYDDF) (HK:1211) move to spur demand via price cuts on its vehicles has backfired badly, as reflected in the steep fall in its Hong Kong-listed stock since May 23. BYD’s Hong Kong-listed stock has shed more than $20 billion of its value over the past two weeks, Bloomberg noted.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
BYD Faces Backlash for Triggering Price War
The electric vehicle (EV) market in China has been under pressure due to intense competition and the impact of macro uncertainty on consumer sentiment. The Bloomberg report cited Andy Wong, investment director for Asia Pacific at Solomons Group in Sydney, who contends that an aggressive pricing strategy alone no longer assures a robust boost to sales, particularly in a relatively more mature and competitive EV market like China.
Wong thinks that the pullback in BYD stock is due to margin woes and weakened sentiment across the EV sector. In the latest round of price cuts, BYD slashed prices by around 10% to 30% on 22 of its battery-powered and plug-in hybrid models. BYD has grown rapidly in recent years and is viewed as a key rival to Elon Musk-led Tesla (TSLA). However, competition in the Chinese EV market has intensified, with the entry of players like Xiaomi Corp. (XIACF) and Huawei Technologies Co. In fact, Xiaomi expects its EV business to turn profitable in the second half of the year.
BYD’s latest round of price cuts has not gone down well with the Chinese government. Reportedly, senior executives of many Chinese EV makers were summoned earlier this week and asked to “self-regulate” and not sell vehicles at unreasonable discounts or below the cost of production, which could drastically weigh on profitability.
Investors are concerned if BYD’s price cuts imply that it is skeptical about achieving its sales target of 5.5 million vehicles in 2025 amid intense rivalry and China’s sluggish macroeconomic conditions. Notably, the latest data indicates that competitors like XPeng Inc. (XPEV) and Zhejiang Leapmotor Technology Co. have gained market share. In May, Stellantis (STLA)-backed Leapmotor’s deliveries jumped 148% year-over-year to 45,067 vehicles, while XPeng reported a 230% year-over-year rise in deliveries to 33,525 units. Meanwhile, BYD sold 382,476 new energy vehicles in May, reflecting a year-over-year growth of 15.3% and a month-over-month rise of just 0.6%. EV giant Tesla continues to disappoint, with its China-made EV sales falling for the eighth consecutive month in May.
Is BYDDF Stock a Buy, Hold, or Sell?
Interestingly, BYD’s Hong Kong-listed stock is still up 57% year-to-date even after the recent selloff. In the U.S., BYDDF stock has risen 55% so far in 2025, driven by the company’s dominance in the EV market and international expansion.
Meanwhile, Wall Street has a Strong Buy consensus rating on BYD Company stock based on 12 unanimous Buys. The average BYDDF stock price target of $67.71 indicates 28.4% upside potential.
