BYD Launches Discounts on 22 Models in China
Burden of Clearing Outdated Inventory Amid Slowing Consumption
Related Stocks Weaken as Price Competition Intensifies
"We offer discounts of up to 35%."
As electric vehicle (EV) consumption in China slows, industry leader BYD has introduced an aggressive price-cutting policy. With the leading company igniting a preemptive "price war," investment sentiment toward BYD and related stocks has also weakened.
According to Bloomberg News on May 26, BYD announced last weekend that it would offer discounts on 22 electric and plug-in hybrid models until the end of June.
The price adjustments include the compact SUV "Seagull," which is now being sold at 55,800 yuan (approximately 1,062,000 KRW), a 20% reduction from the previous price, making it the most affordable in the entire lineup. The mid-size sedan line "Seal," which is subject to the maximum discount rate of 34%, is being sold at 102,800 yuan (approximately 1,959,000 KRW).
Bloomberg pointed out that although BYD's annual EV sales continue to set new records, the rate of sales growth is slowing. In fact, during April and May, two dealership groups selling BYD vehicles in Liaoning and Shandong provinces closed down.
Since launching new vehicles equipped with advanced driver assistance features in February, BYD has also faced the challenge of clearing out older models. According to the China Automobile Dealers Association, BYD dealers' inventory levels ranked third highest among all brands as of January.
Tim Xiao, a Morgan Stanley analyst, and others stated in an investor memo that "some discounts had already been in place since April, but this official announcement strongly highlights just how difficult the end-consumer market is."
However, investors have grown increasingly concerned that a price war led by the industry leader will result in declining profit margins. On May 26, BYD shares fell as much as 6.8% during trading, while related stocks such as Li Auto, Changcheng Automobile, and Geely Automobile also dropped by around 4%.
Meanwhile, BYD has recently surpassed Tesla, the world's top electric vehicle company, in the European market. The Wall Street Journal reported on May 22, citing consumer research firm JATO Dynamics, that 7,165 Tesla battery electric vehicles were registered in Europe last month, a 49% decrease from the same month last year. In contrast, BYD registrations reached 7,231 units, a 169% increase year-on-year, a difference of about 66 units.
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