Chinese EV stocks tumbled after BYD slashed prices by up to 35%, sparking a price war and intensifying competition in the electric vehicle market. Discover the impact, key details, and what it means for investors.
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Chinese EV Stocks Plunge After BYD Slashes Prices by 35%
The Chinese electric vehicle (EV) market is no stranger to rapid change, but the latest move by BYD, China’s leading EV manufacturer, has sent shockwaves through the industry and global financial markets.
In a bold and unexpected move, BYD slashed prices on 22 of its electric and plug-in hybrid models by as much as 35%. This aggressive pricing strategy has triggered a sector-wide selloff, with Chinese EV stocks tumbling and investors bracing for a new era of fierce competition.
BYD’s Price Cuts: A Game-Changer for the EV Market
Late last week, BYD announced sweeping discounts across its lineup, with some of the most popular models seeing their prices drop by up to 35%. The Seagull hatchback, already famous for its affordability, now costs just 55,800 yuan (about $7,780) after a 20% reduction.
The Seal dual-motor hybrid sedan saw the steepest cut, dropping by 34%—a massive 53,000 yuan discount. These price cuts are available until the end of June, giving consumers a limited window to take advantage of unprecedented deals.
But why such drastic cuts? The answer lies in a combination of slowing consumer demand, rising inventory levels, and intensifying competition. Despite record-high annual EV sales in China, growth has started to decelerate.
Dealerships are now sitting on 3.5 million unsold cars, the highest inventory level since December 2023. BYD’s move is a clear attempt to jumpstart sales and clear out older models, especially those lacking the latest driver-assist features, which the company now offers for free on new vehicles.
Market Reaction: Stocks Tumble, Investors Worry
The market’s response was swift and severe. BYD’s shares fell as much as 8.3% in Hong Kong trading, while other major Chinese EV makers—including Li Auto, Great Wall Motor, and Geely Automobile—saw their stocks drop by more than 5%.
Investors are concerned that BYD’s aggressive pricing will spark a full-blown price war, squeezing profit margins and putting additional pressure on an already competitive industry.
Analysts from Morgan Stanley noted that while some discounts had been in place since April, BYD’s official announcement “sends a strong signal of how tough the end market is.” The fear is that other automakers will be forced to follow suit, leading to even thinner margins and potential industry consolidation.
The Ripple Effect: A Sector-Wide Price War
BYD’s price cuts have already started to ripple through the industry. Changan Automobile quickly announced a 25,000 yuan discount on its Deepal S07, and Leapmotor adjusted prices for its C16 and C11 SUVs. Citi Research analysts predict that this could lead to more financial strain across the sector, as automakers race to keep up with BYD’s aggressive strategy.
The intense pricing pressure is straining many carmakers’ bottom lines, leading to mounting financial losses and a wave of industry consolidation. For consumers, however, this means more affordable EV options and greater choice in the world’s largest car market.
BYD’s Strategy: Clearing Inventory and Gaining Ground
BYD’s price cuts are not just about boosting sales—they’re also about clearing out older inventory and making way for new, more advanced models.
In February, BYD announced that it would add new driver-assist features to its vehicles for free, making older models less attractive to buyers. By slashing prices, BYD hopes to move these older cars off dealership lots and maintain its position as China’s top EV brand.
Despite the turmoil, BYD remains optimistic. The company saw a surge in dealership traffic—up 30% to 40% week-on-week after the discounts. If this translates into sales, BYD could continue its record-breaking streak, having already posted its best sales month of 2025 in April. The company is also expanding overseas, recently outselling Tesla in Europe for the first time.
Table: Key BYD Price Cuts
| Model | Old Price (Yuan) | New Price (Yuan) | % Reduction |
|---|---|---|---|
| Seagull Hatchback | 69,800 | 55,800 | 20% |
| Seal Dual-Motor Sedan | 155,800 | 102,800 | 34% |
| Other Models (avg.) | — | — | Up to 35% |
What’s Next for Chinese EV Stocks?
The coming months will be critical for the Chinese EV sector. If BYD’s price cuts succeed in boosting sales, other automakers may be forced to follow, leading to a prolonged price war. This could result in further stock volatility, shrinking margins, and more industry shakeups. However, for consumers, the increased competition means better deals and more innovation.
BYD’s international ambitions are also worth watching. The company recently overtook Tesla in European EV sales, signalling its growing influence on the global stage. As the price war heats up at home, BYD’s ability to expand abroad could be key to its long-term success.
