BYD (BYDDF), a major rival to Tesla (TSLA) in the electric vehicle market, warned that Beijing’s crackdown on deep discounts will drive many competitors out of China’s auto industry. At the Munich Motor Show, BYD executive vice president Stella Li said China’s market, with about 130 EV and hybrid brands, is far too crowded. She noted that “even 20 OEMs is too much.”
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Her comments come as Beijing moves to stop aggressive price wars, which officials say are hurting profits and adding to deflation. Without discounts to attract buyers, smaller carmakers are likely to struggle. Consulting firm AlixPartners expects that by 2030, only about 15 EV and hybrid brands in China will still be financially strong.
BYD Cuts Sales Outlook
BYD has already felt the pressure from China’s tougher market conditions. The company recently lowered its full-year sales goal to 4.6 million vehicles for 2025, down from an earlier goal of 5.5 million, citing rising competition. The downgrade follows a 30% drop in quarterly profit after Beijing tightened rules on supplier payments and discounting.
Citi also lowered its outlook for BYD, now projecting sales of 5.4 million cars in 2025, compared with a prior estimate of 7.2 million. For 2027, the forecast was reduced to 6 million units, down from 8.4 million. BYD sold 4.3 million cars in 2024.
Despite the near-term weakness, Li said the company should benefit as price wars ease and buyers choose cars based on tech and driving features. She added that profits are expected to “remain strong,” though more Chinese automakers will likely look overseas to capture growth.
Overseas Expansion Gains Pace
BYD is moving ahead with overseas plans, with production in Hungary set to start later this year.
Other Chinese firms are also pushing into Europe. State-owned Changan recently launched in the UK, while Leapmotor is working with Stellantis (STLA) to sell EVs in Europe. Still, executives caution that producing cars in Europe is tough due to high labor and energy costs.
Is BYD a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BYD stock based on 7 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average BYDDF price target of $24.85 per share implies 83.53% upside potential.
