One of China’s most famous electric vehicle makers, BYD Co., has seen its stock tumble in dramatic fashion. In just four months, the company’s Hong Kong-listed shares have plunged more than 30% from their record highs. That drop has erased a staggering $45 billion in market value.
The fall has made BYD stand out for all the wrong reasons. While many of its rivals such as Geely Automobile Holdings Ltd. and Zhejiang Leapmotor Technology Co. have managed to hold their ground, BYD’s performance has been much weaker. Investor confidence is now shaken, and questions are mounting about whether the company’s strategy is doing more harm than good.
Analyst ratings have also turned sour. Sell calls on BYD shares are now at their highest point since 2022, according to Bloomberg data. The once-celebrated champion of China’s electric car boom is now under heavy pressure.
Profit Hit and Fierce Price Wars
The sharp stock drop comes at a time when BYD is caught in a brutal price war at home. In China, carmakers are cutting prices aggressively to win customers. BYD has been one of the most active players in this battle, slashing prices across several models.
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This strategy has helped the company keep its sales volumes high, but it has come at a steep cost. In the June quarter, BYD reported a 30% plunge in profits. This was its first earnings decline in more than three years. Investors worry that the focus on discounts is hurting both revenue and profit margins.
The Chinese government has also started voicing concerns about what it calls “involution” in the industry. Officials believe the endless cycle of discounts is unhealthy. They warn that it is creating deflationary pressure and damaging China’s image abroad. The push for tighter rules is adding even more pressure on companies like BYD.
BYD had originally targeted delivering 5.5 million vehicles this year. But the company has now cut that goal down to 4.6 million. To even reach that lowered figure, it would need to deliver around 1.7 million vehicles in the last four months of the year. This is a big challenge, especially since its product lineup is starting to look outdated compared to newer rivals.
Rivals Rise as BYD Struggles
While BYD battles with shrinking profits, some of its competitors are stepping up. Brands such as Geely Automobile and Leapmotor are winning over buyers with fresh models and strong features. Analysts at CLSA Hong Kong noted that BYD’s lineup has lost some of its shine after dominating the market between 2018 and 2024.
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The company has postponed several new model launches until 2026 in order to make them more competitive. That delay has left a gap, giving rivals a chance to grab market share. Buyers looking for “new faces” in the EV market are now turning elsewhere.
Still, BYD has managed to keep momentum in one area: overseas sales. The company has been expanding quickly outside China. Market experts at Goldman Sachs Group Inc. estimate that the company’s overseas deliveries could reach up to 1 million units in 2025. This would be higher than what its own management initially expected.
For investors, one point of interest is the stock’s valuation. BYD’s shares are now trading at 17 times forward earnings. This is lower than its three-year average of 20 times. At the same time, options trading linked to BYD stock has hit record highs, showing just how much attention the company’s sharp moves are attracting.
Back at home, much depends on BYD’s next wave of vehicles. Market watchers expect that upcoming models will include upgraded batteries, longer driving ranges, and more advanced features like its God’s Eye autonomous system. Whether these launches can help restore investor trust remains to be seen.
