BYD in China Experiences 8% Drop in Share Value Following Price Cuts for Electric Vehicles
FILE PHOTO: The company logo of China’s automaker BYD is seen on a car outside its headquarters in China’s southern city of Shenzhen. Bobby Yip | Reuters
Shares in BYD plunged as much as 8.25% Monday, a significant decline from their record high last week, as investors evaluated the Chinese electric vehicle giant’s price cuts announced on May 23. The company shared on the Chinese social media platform Weibo that it would reduce prices on 22 electric and plug-in hybrid models until the end of June.
For example, the Seagull hatchback’s price was decreased by 20% to 55,800 Chinese yuan ($7,780), while the Seal dual-motor hybrid sedan saw a 34% reduction to 102,800 yuan. These latest changes follow prior price adjustments the automaker revealed earlier in the year, including starting prices for its Han sedans and Tang SUVs that were 10.35% and 14.3% lower than previous models.
Analysts from Citi anticipate that BYD’s price reductions led to a 30% to 40% increase in foot traffic at its dealerships between May 24 and 25, compared to the previous weekend.
Shares of other Chinese automakers also declined on Monday as investors expressed caution regarding increased competition and the possibility of a price war in the sector. Geely Automobile’s shares were last observed down 7.29%, while Great Wall Motor Co and Li Auto experienced drops of 2.94% and 4.93% respectively. Furthermore, shares in Xpeng fell by 4.19%.
Looking ahead, Citi’s analysts do not believe that BYD’s price cuts will significantly impact its competitors’ market share. Instead, they foresee “robust sales growth” for new energy vehicle companies with pricing below 200,000 Chinese yuan, as “competition remains relatively mild,” the analysts noted in a May 26 update.
