Why is BYD plagued by turmoil in EV market at its China home base?

Dubai: Once the unstoppable leader of China’s electric vehicle sector, BYD now faces turbulence at home. Intense competition, government pressure, and shifting consumer preferences are forcing the company to rethink its strategy—both for its products and its market positioning.

BYD has long relied on aggressive pricing to capture market share, offering steep discounts on popular models. While this approach helped the company dominate sales between 2018 and 2024, it has also fueled a destructive price war across the Chinese EV market.

Competitors like Geely, Leapmotor, and Nio are increasingly winning over buyers with fresh, innovative models, leaving BYD under pressure to defend its market position.

The June-quarter results highlighted the impact: BYD reported a 30% drop in profits—the first decline in over three years—largely due to margin compression from the ongoing price battles.

Beijing has grown concerned about what it calls “involution”: excessive competition that depresses prices and damages the long-term reputation of Chinese manufacturing. BYD’s deep-discount strategy has drawn regulatory scrutiny, and authorities are increasingly encouraging companies to compete on technology and innovation rather than price alone.

For a company that once set the pace in EV innovation, BYD’s domestic offerings are now starting to show their age. Consumers are gravitating toward newer entrants with sleeker designs, extended battery ranges, and cutting-edge features.

Analysts note that the company’s delayed 2025 and early 2026 model launches are aimed at addressing this gap, but any delay adds short-term revenue pressure.

Upcoming launches are expected to feature BYD’s “God’s Eye” autonomous driving system in more affordable models, battery upgrades, and enhanced plug-in hybrid ranges—moves designed to reassert technological leadership rather than just price competitiveness.

BYD has revised its 2025 delivery forecast from 5.5 million to 4.6 million vehicles, reflecting the challenging domestic environment. Meeting this target will require shipping around 1.7 million units in the final four months of the year—a tall order given the intense competition and regulatory climate.

Despite the domestic hurdles, BYD is making strong gains internationally, with overseas sales projected to hit up to 1 million units in 2025, surpassing earlier targets. This global expansion helps offset some domestic pressures but cannot fully replace growth in China, which remains the company’s core market.

While the company’s Hong Kong-listed shares tumbled by over 30% from their peak earlier this year, analysts emphasize that the stock drop reflects investor concern over short-term domestic challenges rather than the long-term health of the company. Valuation remains attractive, trading at 17 times forward earnings compared with a three-year average of 20 times.

BYD’s path forward depends on its ability to innovate and reposition itself in a crowded domestic market. Analysts expect the company to focus on technology-led differentiation, strategic pricing, and timely model launches to maintain its competitive edge.

For domestic consumers, the turbulence signals an evolving EV landscape: more choices, better technology, and rising competition that may finally shift BYD from price leader to innovation leader—if it can navigate the challenges ahead.