Chinese Automaker Faces Crisis: From Boom to Uncertainty
After several years of rapid growth and dominating the global electric vehicle market, the Chinese automotive giant BYD finds itself facing unexpected challenges that threaten to derail its ambitious plans.
The company, renowned for its aggressive pricing strategy, innovative technologies, and large-scale international expansion, is now dealing with declining domestic sales and increased government restrictions.
Bloomberg reports that despite achieving significant international success in 2024 and maintaining a leading position among global EV manufacturers, internal market struggles have begun to surface.
Since May, when domestic sales started to drop, BYD has been trying to sustain itself through discounts, increased competition from rivals like Geely, Leapmotor, and Xiaomi, and seasonal demand weaknesses, which led to its first quarterly profit decline in three years in August.
Additionally, stricter Chinese government control over pricing policies has limited BYD’s flexibility in engaging in price wars.
Data analyses show that between May and August, domestic deliveries decreased by 10% year-over-year, adding further pressure.
Meanwhile, the company’s international markets remain a critical lifeline, as export strategies and global expansion continue to bring in profit, albeit smaller.
Nonetheless, the situation abroad is also becoming more complex, as governments in Europe, Latin America, and beyond are seeking to limit the rapid influx of inexpensive Chinese electric vehicles.
The core issues stem from regulatory actions: new restrictions on discounts have reduced BYD’s strategic levers, and new procurement financing rules have cut supplier settlement periods from 275 to 60 days, impacting cash flow.
Furthermore, Chinese authorities are contemplating banning the resale of new vehicles post-registration, which could hamper quick trading and market growth inside China.
Despite these hurdles, BYD persists in its global quest, leveraging affordability and the strategy of international expansion to stay competitive, although it faces increasing risks and regulatory hurdles.