BYD: In the crossfire – share continues to be under pressure
BYD is under massive pressure: First, the automaker heated up competition with radical price cuts , and its share price plummeted as a result. Now the company is facing massive accusations. Rivals and analysts accuse BYD of aggressive market distortion and regulatory violations. The Chinese government is also intervening.
The electric car price war in China began in spring 2023. At the time, it was triggered by massive discounts from Tesla and BYD. Another bombshell followed in May of this year: BYD reduced the price of numerous models – by as much as 34 percent. The price collapse not only caused the share price to plummet, but also riled up the competition against the industry leader. Chinese authorities reacted with alarm and summoned industry executives to an emergency meeting last week.
Amidst the tensions, an old dispute is now flaring up again: Great Wall Motor reported BYD to regulators back in 2023 – due to allegedly inadequate emissions levels in its Qin Plus and Song Plus hybrid models. Great Wall Chairman Wei Jianjun recently confirmed that the investigation is ongoing.
And now Geely is also publicly siding with Great Wall: At an industry event in Chongqing, Vice President Victor Yang stated that the company had conducted its own tests and reached the same conclusion as Great Wall. Specifically, this concerns the use of non-pressurized fuel tanks in BYD's Qin Plus and Song Plus hybrid models, which are said to lead to higher evaporation. BYD denies the allegations but stated that it installed the affected components between 2021 and 2023 in compliance with applicable regulations.
Meanwhile, experts are also expressing skepticism about the price decline. "What we're seeing in China is worrying – lack of demand is met with extreme price wars," warns John Murphy of Bank of America. Industry expert Jochen Siebert goes even further: "The largest player wants to impose a monopoly."
The allegations and statements against BYD demonstrate the extent to which the market leader is putting pressure on its competitors with its discounts. In the long term, BYD is likely to emerge as the winner from the price war. Nevertheless, the stock fell another 1.6 percent on Monday as a result of the allegations, but managed to defend its position on the important GD50 index. Since there are also other bright spots , investors are staying with BYD.
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