BYD Struggles as EV Price War Erodes Profits

Chinese carmaker BYD is facing a tough economic period. Its vehicle sales dropped by 33% in the third quarter of 2025, dragging down both profits and overall revenue.
The main issue appears to be the company’s inability to sell as many electric cars as it produces, despite having focused on the EV segment for many years.

In Q3 2025, BYD’s net profit fell to 7.82 billion yuan (about 1.07 billion dollars), while revenue declined by 3% to 195 billion yuan. This marked the second consecutive quarterly downturn for the Chinese manufacturer.

Chinese incentives and a fierce competition in the EV market

Even with government incentives, China’s domestic demand is slowing sharply due to intense competition from numerous local automakers. The electric vehicle sector has become oversaturated, with dozens of brands fighting for the same buyers and effectively cannibalizing the market.

The ongoing price war, aimed at offering cars at ever more competitive prices, is significantly reducing profit margins per vehicle sold.
Adding to the pressure are new government regulations that require additional discounts for consumers, while raw material suppliers continue to raise their prices.

As the saying goes, the market rule is simple: higher demand means higher prices. But right now, the opposite is happening.

Even Ferrari experienced a drop in its stock value following the presentation of its first electric car project.

BYD Vs Tesla

BYD’s strategy now seems to be shifting, focusing on limiting the damage and expanding into foreign markets such as Europe, Latin America, and Southeast Asia.

A comparison with Tesla, the first major automaker to embrace large-scale electric production, highlights some striking differences.
Elon Musk’s company closed Q3 2025 with revenue up 12% to around $28 billion and a net profit of $1.4 billion in sales.
Tesla’s global deliveries came close to half a million vehicles, though price cuts also affected its margins.

Overall, the numbers reveal a challenging and overcrowded Electric market, where automakers continue to undercut each other. A situation that, for now, benefits consumers, who can purchase electric vehicles at historically low prices.