BYD battles price wars locally while accelerating global expansion

BYD, China’s biggest electric vehicle manufacturer, reported its first quarterly profit decline in three years. Second-quarter net income tumbled nearly 30% to ¥6.36 billion ($892 million), coming in well below analyst ￰0￱ Shenzhen-based automaker has been expanding rapidly at home and overseas since 2021, but slowing margins have started to weigh on ￰1￱ revenue climbed 14% year-over-year to ¥201 billion, the gains weren’t enough to offset the pressure from price ￰2￱ margin slipped to about 18%, down from 18.8% a year earlier, underscoring how discounting is eroding ￰3￱ battles at home with price wars while accelerating global expansion China remains the world’s largest electric vehicle market, but the competition has grown ￰4￱ like BYD, Tesla, Geely, Nio, and Xpeng are locked in a price war , alongside dozens of smaller ￰5￱ stay competitive, BYD slashed prices on more than 20 models this year, with discounts reaching up to 34%.

The strategy boosted sales volumes but squeezed profits, while excess inventory across the industry pushed automakers to cut prices even ￰6￱ relentless race to the bottom has already forced some smaller EV startups out of ￰7￱ have started to ￰8￱ July, Chinese authorities urged automakers to end what they called “involution”, a destructive cycle where everyone ￰9￱ warned that unchecked price wars risk damaging the supply chain and undermining the global reputation of Chinese-made ￰10￱ BYD, which had a hand in starting the price war in 2023, now acknowledges that it isn’t a viable long-term business ￰11￱ said in June that the current discounting melee was not sustainable and threatened lasting harm to the industry.

BYD’s foreign operations are booming even as profits slump at ￰12￱ the first seven months of 2025, international sales more than ￰13￱ company has made big inroads in Europe, Southeast Asia, and Latin ￰14￱ Europe in May, BYD took Tesla’s monthly ￰15￱ is also constructing factories in Hungary and Turkey, and has chartered a fleet of roll-on/roll-off ships to accelerate ￰16￱ has emerged as one of its largest international markets, representing about a third of international ￰17￱ yet, despite this momentum, foreign growth hasn’t been enough to fully compensate for soft margins in ￰18￱ say higher marketing expenses and more new technology purchases are dragging down ￰19￱ stalls as financial pains worsen BYD is also confronting expanding financial ￰20￱ its working capital deficiency increased from ¥95.8 billion as of March to ¥122.7 billion as of June ￰21￱ ratio of debt to assets rose to 71.1%.

At the same time, the company has had to rethink how it manages payments to suppliers while continuing to offer steep discounts on inventory. Previously, BYD often delayed payments for more than 200 days, far longer than global industry ￰22￱ government rules now require suppliers to be paid within 60 ￰23￱ this shift helps protect smaller suppliers, it reduces BYD’s financial flexibility and piles additional pressure on its balance ￰24￱ on research and development is increasing, too; it’s up over 50% from a year ￰25￱ is relying on a heavy investment in batteries, electrification, and smart-car technologies to protect its long-term lead. Higher-margin brands like Yangwang and Fangchengbao might offer better margins, but building them out will take ￰26￱ have trimmed ￰27￱ had targeted to sell 5.5 million vehicles in 2025, but estimates now project 5 – 5.2 ￰28￱ company remains the dominant force in China’s EV business and a global front-runner in the same ￰29￱ at Sanford ￰30￱ described the shrinking margins as “scars of competition.” However, the firm still holds an outperform rating on the stock and touted BYD’s global scale and technological ￰31￱ your project in front of crypto’s top minds?

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