The Harsh Reality for Electric Vehicle Leaders
Electric vehicles (EVs) are often seen as the future of transportation, but the recent financial results from BYD Co. prove that even the industry’s strongest players are not immune to the brutal realities of price competition. In Q2 2025, BYD shocked investors by reporting a 30% plunge in quarterly profits — its first decline in over three years. The company’s stock tumbled by as much as 8% in Hong Kong before slightly recovering, underscoring investor concern over profitability in an increasingly cutthroat market.
While BYD remains the world’s top EV seller, its earnings slump shows that aggressive discounting, rising costs, and fierce competition from Tesla, Geely, and China’s BYD rival, Chery, are reshaping the industry.
BYD’s Financial Struggles in Q2 2025
BYD reported net income of 6.36 billion yuan ($892 million) for the quarter ending June 30, falling short of analyst expectations. Despite strong 50% growth in overseas sales, profit margins weakened sharply. Gross margin contracted to 18% from 18.8%, reflecting the heavy impact of discounts and higher material costs.
Ironically, BYD has been one of the main drivers of the EV price war it now blames for reduced profitability. Since 2023, the automaker has led multiple rounds of price cuts, forcing the government to step in and warn that excessive discounting could harm supply-chain security and tarnish the “Made in China” reputation globally.