BYD’s $45-B Stock Wipeout Raises Doubts on China Outlook

BYD Co. faces pressure to restore investor confidence after a $45 billion stock selloff, with mounting concerns over its ability to fend off competition amid a destructive price war in China, Charlotte Yang reported for Bloomberg News.

BYD reported a 30% plunge in June-quarter profit, its first decline in more than three years due to the price war. (Photo: BYD Global Facebook)

The Chinese electric-vehicle maker’s Hong Kong-listed shares have plunged more than 30% from their all-time high just four months ago, underperforming peers.

Analyst sell ratings on BYD have climbed to the highest level since 2022, according to Bloomberg-compiled data. Investors are losing patience with BYD’s strategy of leading with deep discounts, while Beijing clamps down on the so-called involution, wreaking havoc across the industry.

Meanwhile, rivals such as Geely Automobile Holdings Ltd. and Zhejiang Leapmotor Technology Co. are gaining ground.

“While I believe investors retain a positive long-term view, there is a real concern around BYD’s aggressive ‘market share gain by pricing pressure’ strategy in the anti-involution context,” said Kevin Net, head of Asian equities at Financière de l’Echiquier.

“In the short term, this should still weigh on both topline and margins.”

BYD reported a 30% plunge in June-quarter profit, its first decline in more than three years due to the price war. As China’s top EV maker, BYD has spearheaded multiple rounds of discounts in recent years as manufacturers battle for market share.