It turns out that the world is full of aggressive aggression ... ?! Including in the car sales markets!

Shares of Chinese electric vehicle (EV) manufacturer BYD plummeted on Monday after a series of price cuts across its entire model range, raising investor concerns about increasing competition and the prospect of a larger price war.

On May 23, BYD announced on its official Weibo account temporary discounts on 22 of its electric and plug-in hybrid vehicles until June 30. For example, the price of the Seagull hatchback was reduced by about 20% to 55,800 yuan (approximately $7,780), while the price of the dual-motor hybrid sedan Seal dropped by about 34% to 102,800 yuan.

Earlier this year, BYD had already lowered the starting prices of its Han sedans by 10.35% and Tang SUVs by 14.3% as part of its current strategy to stimulate demand.

In early trading, BYD shares listed in Hong Kong fell by 6.53% to 434.80 Hong Kong dollars, while those on the Shenzhen exchange dropped by 3.89% to 389.25 yuan. In the sharpest intraday decline, shares in Shenzhen fell by more than 8.25%, wiping out gains from a recent record high.

Analysts point to rising dealer inventories as a key factor in the aggressive promotional campaign. According to a note from Deutsche Bank published on May 24, BYD's dealer inventories increased by approximately 150,000 units in the first four months of 2025, which is equivalent to nearly half of the monthly retail sales volume, resulting in inventories reaching a three-to-four-month high, which may be the upper limit that dealers can sustain.

A research team from the bank led by Wang Bin suggests that the company's ambitious goal of selling 5.5 million vehicles this year, which is 30% more than in 2024, is currently outpacing actual retail sales growth, which reached only 15% year-on-year by April. To reduce excess inventory, BYD has rolled out deeper and broader discounts.
This has become the latest trend in China's electric vehicle sector. On Monday, shares of Geely Automobile fell by 7.3%, Great Wall Motor dropped nearly 3%, Li Auto lost about 4.9%, and Xpeng fell by 4.2%. Investors are becoming more cautious as the price war threatens margins and may force competitors to follow suit.

Indeed, within days of BYD's announcement, other manufacturers announced their own discounts. Dongfeng Motor reduced the starting price of its eπ 007 sedan from 132,000 to 120,000 yuan, cutting it by 9%. IM Motors lowered the base price of its LS6 electric SUV to 194,900 yuan until June 30, additionally allowing buyers to qualify for a national trade-in subsidy.

Leapmotor announced a limited price reduction on its base electric SUV C16 with an extended range from 155,800 to 111,800 yuan, and on the C11 EREV variant from 148,800 to 103,800 yuan for purchases made before June 8.
However, some strategists see an opportunity rather than a threat for the wider new energy vehicle (NEV) sector. Citi analysts noted that after BYD's recent cuts, foot traffic at its dealerships increased by approximately 30-40% from May 24 to 25 compared to the previous weekend.

The Citi team claims that BYD's aggressive pricing could actually accelerate market expansion rather than simply siphoning off competitors' market share.

The company has already surpassed Tesla in sales in Europe for the first time. According to data tracked by JATO Dynamics, in April BYD registered 7,231 fully electric vehicles across Europe, surpassing Tesla's figure of 7,165 vehicles. Europe has long been Tesla's territory; however, BYD entered this market only at the end of 2022. Now, as competition in the EV market intensifies and Xiaomi has recently also announced its entry, investors are waiting to see whether the massive discounts will stimulate growth or lead to lower valuations in the Chinese EV market.

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