BYD Stock Plunges 9% As New Price War Begins! Is a EV Winter Coming?

TradingKey - As of press time on May 26, 2025, BYD's H shares closed with a single-day decline of 8.38%, evaporating a market value of over 100 billion yuan.

[BYD intraday chart, source: Futu]  

Geely Auto, Great Wall Motor, and Leapmotor also declined significantly. The main reason for this collective drop was BYD's initiation of a new round of price wars, sparking market concerns about industry profit prospects.  

On May 23, BYD announced time-limited promotions for 22 intelligent-driving models under its Dynasty and Ocean series, with maximum discounts reaching 53,000 yuan. This marks BYD's third large-scale price cut since late March, with both the discount range and number of models involved exceeding previous rounds.  

BYD's price reductions are seen as the beginning of a new price war. This "trading price for volume" strategy may compress corporate profit margins, especially amid intensifying competition in the new energy vehicle industry where profitability remains unstable.  

Morgan Stanley noted that escalating price wars could make investors more pessimistic about the industry outlook.  

Not just BYD - other automakers like Leapmotor and Great Wall have also joined the price-cutting trend with various promotions. This fierce market competition reflects automakers' survival challenges under sales pressure.  

According to National Bureau of Statistics data, China's automobile manufacturing profit margin has declined from 7.8% in 2017 to 4.4% in 2024.  

As a pioneer in EVs, BYD has stronger risk resistance and more stable profitability than other automakers. In Q1 2025, BYD's revenue grew 36.35% year-over-year, net profit attributable to shareholders increased 100.38%, hitting a record quarterly high, while non-GAAP net profit rose 117.80%.  

Key follow-up events to watch:  

Fundamentally: The auto sector may face a temporary winter, potentially with polarization - monitor automakers' Q2 earnings forecasts.  

Technically: Emotional sell-offs may create technical rebound opportunities for industry leaders.