Shares of BYD Co., a major Chinese electric vehicle (EV) manufacturer, dropped by 6.8% in Hong Kong trading on May 26, 2025.

This decline follows the company’s announcement of price reductions of up to 35% on 22 electric and plug-in hybrid models.

The price cuts, effective until the end of June, come as EV sales show signs of slowing growth, despite reaching record annual figures.

Other Chinese automakers, including Li Auto Inc., Great Wall Motor Co., and Geely Automobile Holdings Ltd., experienced share declines of over 4%. This indicates investor concerns over heightened competition.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s EV price war follows historical industry pattern of consolidation

BYD’s aggressive 35% price cuts reflect a market maturation phase similar to what the early automotive industry experienced in the 1900s when dozens of car manufacturers competed before consolidation.

The current Chinese EV market features nearly 50 manufacturers competing intensely with discounts averaging 16.8% across the industry 1.

This competition highlights how only the strongest companies survive—currently only three manufacturers (BYD, Seres, and Li Auto) remain profitable amid the price war 1.

Market analysts predict many smaller brands will exit or be acquired within two years, reflecting the consolidation that has occurred during previous automotive technological transitions 1.

The price war is making EVs more accessible, with Geely’s Galaxy EV brand now offering models at just $9,500. However, it raises questions about long-term industry sustainability as profit margins shrink 1.

2️⃣ EV market faces persistent adoption challenges despite technological progress

Despite significant technological advances, today’s EV market still confronts fundamental barriers that have affected electric vehicles for decades.

The 2025 Mobility Consumer Pulse Survey reveals that consumer concerns about range, price, and charging infrastructure remain the primary obstacles to adoption—the same issues that contributed to EV decline in the early 1900s 2.

Regional adoption varies dramatically, with purchase intent at 45% in China but only 12% in the US, showing how market development differs across geographies 2.

The price gap between EVs and conventional vehicles has narrowed to US$11,087 according to April 2025 data, but this still represents a significant premium for many consumers 3.

These persistent adoption barriers explain why manufacturers like BYD must use aggressive pricing strategies to drive volume 2.

3️⃣ Global EV competition shifting toward affordability over technological innovation

BYD’s price cuts signal a shift in the competitive landscape from technology differentiation toward price competition, reflecting the maturing EV market.

BYD’s entry-level Seagull hatchback price reduction to 55,800 yuan ($7,780) demonstrates how Chinese manufacturers are focusing on affordability to drive adoption 1.

This strategy has proven effective in Europe, where BYD’s sales surged 169% year-over-year while Tesla’s declined by 30%, allowing BYD to outsell Tesla for the first time in April 2025 4.

The shift toward affordability reflects consumer priorities identified in multiple market studies, where price concerns consistently rank among the top barriers to EV adoption 2.

This competitive dynamic is reshaping the global EV market as manufacturers must balance technological advancement with price accessibility, potentially forcing premium brands like Tesla to reconsider their pricing strategies 4.

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