The stock price of Chinese electric vehicle behemoth BYD tanked. On Monday, it crashed nearly 8.25%. This drop follows the company’s announcement of widespread price reductions on a range of electric and plug-in hybrid models, a move that has raised questions among investors about the company’s future performance.
Last week, BYD’s shares hit an all-time high, the booming stock market confidence in the firm’s new monopoly on the market. The price cuts – newly announced on May 23 – have changed investor sentiment. The company took a dramatic step of cutting the price of its Seagull hatchback by 20%. Now, that price has dropped to only 55,800 Chinese yuan (roughly $7,780). Separately, BYD cut the price of its Seal dual-motor hybrid sedan by 34%, to 102,800 yuan. The price reductions cover 22 distinct models, the cuts of which last through the end of June.
BYD shared the news via its official account on Weibo, China’s popular social media platform. This announcement caught fire almost immediately with consumers and industry analysts alike. According to Citi analysts, following the reductions, they forecast showroom traffic to BYD’s direct sales stores will jump 30% to 40% from May 24 to May 25. This tremendous increase is a strong indication that consumers are increasingly interested.
BYD undercut them sharply on price with its Han sedans and Tang SUVs. The reductions are 10.35% for the Han sedans and 14.3% for the Tang SUVs relative to their predecessors. This kind of strategic pricing is not unusual in the current market environment. Instead, other Chinese automakers including Geely Automobile, Great Wall Motor Co., and Li Auto saw their stock prices plunge.
Despite these challenges, analysts maintain a positive outlook for new energy vehicle companies like BYD, especially with prices falling below 200,000 Chinese yuan. The fierce competition and consumer demand for electric vehicles have made this segment a key driver of strong overall sales momentum.
BYD has shown that it has a competitive advantage before, beating Tesla to electric vehicle sales in Europe even with the higher import tariff. Recent aggressive price cuts have forced investors to re-evaluate the company’s long-term prospects. At the same time, they’re redefining its strategic course amid a volatile and increasingly competitive market.