BYD launches a price war in the Chinese market with discounts that even exceed 30 percent

The Chinese giant BYD, a global leader in the electric vehicle market, has launched an aggressive local discount campaign on its Dynasty and Ocean series, valid until the end of June. With this move, the Chinese manufacturer appears to be seeking to boost sales of its vehicles and thereby reduce its accumulated inventory. A decision that may be very positive for the company, but that could also bring other unintended effects.

For the moment, the effect of this exceptional measure has already been felt on Asian stock exchanges, with a drop in the company’s share price, and there is also some concern about the consequences of a possible price war among electric vehicle manufacturers in the Chinese market.

As we said, these discounts affect the Ocean and Dynasty series of BYD. For example, the most popular model from BYD, the Seagull city car, which we in Europe have known for only a few days as the Dolphin Surf, is now available on the Chinese market at a clearance price from just 55,800 yuan. At the current exchange rate, that comes to roughly 6,800 euros. About 21 percent less than it cost just a few days ago.

On the other hand, in the Dynasty series, the price of the Qin Plus DM-i plug-in hybrid has also dropped from 79,800 yuan – about 9,700 euros – to just 63,800 yuan – a little under 8,000 euros. This likewise represents a reduction of almost 21 percent.

A month of major discounts

According to a market analysis presented by Deutsche Bank, this aggressive campaign by BYD responds to an excess of inventory at the brand’s dealerships, with more than 150,000 units accumulated in the first four months of the year. Experts estimate that the current stock level, equivalent to three or four months of sales, is the limit distributors can bear. The manufacturer’s decision to cut prices drastically to reduce stock levels has, however, had a negative effect on the company’s share price on the Hong Kong and Shenzhen stock exchanges, with a drop of several percentage points after the news became known.

BYD’s offensive has shaken the Chinese market and has also had an impact on competing brands. IM Motors, Leapmotor and Geely Galaxy have already announced price reductions on their vehicles, and similar moves from other manufacturers are expected. IM Motors, for example, offers the LS6 electric SUV from 194,900 yuan – about 23,700 euros – which represents 19 percent less than it previously cost. Likewise, Leapmotor has cut the prices of its EREV models with range extender, such as the C11 SUV, which now costs 30 percent less and is available from 103,800 yuan – about 12,700 euros. Meanwhile, the C16 is sold from 111,800 yuan – 13,650 euros – with a 28 percent discount on its usual price. Geely Galaxy has also applied price reductions of between 8 and 18 percent on models such as the Xingyuan, which is offered for 59,800 yuan – 7,300 euros – until early June, with a 13 percent discount.

In view of this situation, some analysts have been quick to react, warning that BYD’s strategy could significantly intensify competition, especially in the more affordable vehicles aimed at urban use, whose prices were already lower until now. In 2023, a similar move carried out, in this case, by Tesla, which involved a significant reduction in the price of its vehicles on the Chinese market, ended up triggering a price war that mainly affected mid-range models. This time, however, the aggressive discounts also apply to much more affordable models, which suggests the effects on the Chinese market may be far deeper.