BYD (BYDDF) just threw down the gauntlet in China’s electric vehicle war. The company slashed prices by as much as 34% on 22 of its models including its headline-grabbing Seagull, now priced at just $7,700. The promotion runs through June and looks less like a marketing campaign, more like a shot across the bow. Investors took notice fast: BYD shares dropped over 8% Monday, with other EV stocks sliding in tandem. According to analysts, this aggressive push is all about hitting BYD’s ambitious 2025 sales goal of 5.5 million vehicles a 30% jump from last year. Morningstar’s Vincent Sun summed it up: this is about volume, not margin.
But the fallout is already spilling across the sector. Geely, Leapmotor, and others rushed to match BYD’s discounts. Meanwhile, BYD’s inventory ballooned to 154.37 billion yuan at the end of March up 33% quarter-on-quarter. The message is clear: Chinese EV makers are under growing pressure to move units, even if it means losing pricing power. Analysts say this kind of price war might be effective in the short run, but over time it could weaken brand value and squeeze out players with fragile balance sheets. Oscar Wang from Haitong warned that if no one steps in to cool things down, the second half of 2025 could become an all-out cost-cutting bloodbath.
And the ground is already shifting. China’s state-backed automakers are starting to merge Changan and Dongfeng are finalizing integration, and Geely is taking Zeekr private to tighten operations. S&P Global says this could be just the beginning. With auto inventories peaking and competition heating up at every price point, a new phase of forced consolidation may be on the horizon. For investors, the key question now is not just who can grow but who can survive.
This article first appeared on GuruFocus.
