Price War Has No Winners: BYD Sales Surge, Shares Fall as Short Bets Surge Over Tenfold

TradingKey - BYD (1211.HK), China’s leading electronic vehicle (EV) manufacturer, has once again ignited a fierce price war in the EV sector — boosting its monthly sales to a record high for 2025. Yet, the aggressive pricing strategy appears to have come at a cost: shares of the automaker have fallen sharply, and sentiment across the broader EV industry has soured.

According to Bloomberg, BYD's stock lost more than USD 20 billion in market value over the past two weeks following its late-May decision to slash prices on several models by up to 34%. 

On Friday, BYD’s Hong Kong-listed shares closed down 1.21% at HKD 406.8, extending a roughly 13% drop over the prior fortnight.

Analysts say the recent sell-off reflects growing investor concerns about margin pressure and the overall sluggish outlook for the electric vehicle industry. In a maturing and increasingly competitive market, aggressive pricing alone is no longer enough to guarantee strong sales growth, they warned.

Data from S&P Global shows that short interest in BYD has surged, with bearish bets rising from just 0.3% at the start of the year to 4.4% — an increase of more than tenfold.

Last month, BYD continued its three-year trend of lowering prices, marking its third major promotional campaign this year. The price cuts appeared to work — the company sold 982,476 units in May, a year-on-year increase of 15.3%, and the highest monthly figure so far this year.

However, both state-backed media and regulators have stepped in to caution against cutthroat competition. People’s Daily, China’s official mouthpiece, recently published an article criticizing automakers for sparking a fresh round of price wars. The Ministry of Industry and Information Technology (MIIT) also weighed in, saying “price wars have no winners, and no future.”

The ministry urged automakers not to distort business logic under capital pressure and instead focus on long-term innovation rather than short-term gains in stock valuations.

Macquarie analysts described BYD’s price-cutting campaign as a temporary marketing tactic aimed at drawing customers during the traditionally slow season. In reality, BYD is well aware that sustained price reductions are not a viable long-term growth strategy.