China sends warning to BYD and its rivals amid heightened price wars

Chinese authorities summoned executives from the country’s major electric vehicle (EV) manufacturers, including industry leader BYD Co., to a closed-door meeting in Beijing this week, according to people familiar with the matter, cited by Bloomberg. 

The intervention reportedly involved three of the country’s most powerful regulatory agencies: the Ministry of Industry and Information Technology, the State Administration for Market Regulation, and the National Development and Reform Commission. 

Senior representatives from over a dozen automakers, including Zhejiang Geely Holding Group and Xiaomi Corp., were present, the people said.

Officials instructed the automakers to “self-regulate” their pricing strategies and warned against selling vehicles below cost or engaging in “discount campaigns.” The discussion touched on  “zero-mileage” vehicles and unpaid bills to suppliers, which are supposedly contorting supply chain finances and functioning as de facto debt instruments.

Authorities seek market stability in competitive markets

According to anonymous sources, the Chinese leadership worries that prolonged price cuts are pushing some automakers toward insolvency. Although the meeting resulted in no formal directive, the tone of the conversation exuded “seriousness,” insiders said.

A spokesperson from Geely cited Chairman Li Shufu’s recent remarks, in which he said the company is “against price wars.” Moreover, at a press briefing on Thursday, the Ministry of Commerce reiterated that it will continue to work with other departments to improve oversight of the auto industry and create an environment with fair competition.

Late last month, BYD cut prices by up to 34%, a decision that industry groups and state media outlets did not receive well . 

Without naming BYD directly, the China Automobile Manufacturers Association bashed a recent pricing action by “a certain company” for triggering “price war panic” and plunging the industry into what it described as a “vicious cycle.” 

The group warned that indiscriminate discounting was undermining profitability across the sector and endangering supply chain security.

On Friday, according to Google Finance data, shares of BYD fell by as much as 2.7%, while Xiaomi dropped 2.4%. Geely Automobile Holdings declined 1.7% in Hong Kong trading.

State media criticizes discount practices

Chinese state-run media outlets, including Xinhua, the People’s Daily, and CCTV, have published reports calling for an end to reckless discounting, asking automakers to focus on quality and industry stability. 

The People’s Daily, the Communist Party’s flagship newspaper, argued that such pricing tactics could lead to low-quality output and tarnish the international image of “Made-in-China” products.

According to accounting consultancy GMT Research, BYD’s real net debt may be as high as 323 billion yuan ($45 billion), significantly higher than the 27.7 billion yuan listed in its mid-2024 financial disclosures. The firm said that the gap could have been caused by BYD’s practice of delaying supplier payments and fiddly financing strategies.

BYD looks towards the South African market 

Away from the heat at home, BYD plans to nearly triple its dealership network in South Africa by next year, according to a senior company executive.

Steve Chang, General Manager of BYD Auto South Africa, said in a Wednesday interview that the company will grow its dealerships from 13 to approximately 30–35 by the end of next year. 

“We want to educate and cultivate the market of South Africa,” Chang told Reuters.

South Africa’s new energy vehicle (NEV) market is still in the early stages but is growing fast. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), NEV sales rose to 15,611 units in 2024, up from 7,782 in 2023.

Chang is hopeful BYD will move ahead of its competitors in the African market by setting up shop in the continent early.