Struggling electric vehicle manufacturer experiences sales decline
BYD, a leading electric vehicle (EV) brand in China, is currently grappling with revenue pressure due to a combination of market and regulatory challenges.
The slowing growth of plug-in hybrid electric vehicles (PHEVs), a significant revenue contributor for BYD, is a major factor. As the company shifts its focus towards battery electric vehicles (BEVs), driven by regulatory support and consumer demand, the PHEV market is showing signs of stagnation.
In addition, increased global trade barriers and tariffs, particularly in key expansion markets like the European Union, are creating cost and pricing pressures that are hampering growth internationally.
The Chinese EV market has been plagued by a significant price war, leading many automakers, including BYD, to sell vehicles at a loss. The Chinese government intervened in July 2025 to curb “irrational competition” through price monitoring and cost investigations. While this crackdown aims to stabilise margins, BYD has faced margin erosion during the intense competition phase.
The July 2025 delivery figures showed a 10.1% global sales decline for BYD, reflecting broader sector risks after prolonged growth and suggesting current demand is under pressure amid pricing and regulatory tightening.
By contrast, competitors like Geely, Xpeng, and Xiaomi have gained market share by balancing aggressive pricing with brand differentiation or focusing on technology innovation. While BYD remains heavily invested in R&D and is expanding worldwide, these headwinds are causing revenue growth to slow and profitability pressure in 2025.
No evidence suggests BYD is operating at an overall loss, but its revenue gains are strained by these market dynamics and the challenging competitive landscape in both domestic and foreign markets. The tight margins from the price war and slowing PHEV demand are key contributors to their revenue performance issues this year.
In July 2025, BYD produced only around 341,000 vehicles, a decrease of 36,000 from the previous month. This decline is the first visible proof that even the strongest brands in China's electric vehicle revolution are not invincible.
The electric vehicle market in China is experiencing a slowdown, with buyers hesitating and prices under pressure. Startups with smart technology and political forces pushing for stability are putting pressure on BYD. The market consolidation in the electric vehicle industry seems imminent.
Import duties of up to 38% could affect BYD's expansion plans in Europe from 2025. Margins for BYD are shrinking due to the market conditions, and the shrinking margins indicate a challenging economic situation for the electric vehicle industry.
Despite these challenges, BYD continues to invest in research and development and expand worldwide. The company sold over 4.2 million vehicles worldwide in 2024, including nearly 1.6 million pure electric models. With its strategic partnership with Stellantis, giving it access to European know-how, better software, and credibility in exports, BYD is well-positioned to weather these storms and emerge stronger in the future.
[1] BloombergNEF (2025). China EV Sales Tracker Q2 2025. [online] Available at: https://about.bnef.com/blog/china-ev-sales-tracker-q2-2025/
[2] Reuters (2025). China's BYD to cut prices on over 20 models to boost sales. [online] Available at: https://www.reuters.com/business/autos-transportation/chinas-byd-cut-prices-over-20-models-boost-sales-2025-03-23/
[3] CNBC (2025). China's BYD posts first decline in EV sales as competition heats up. [online] Available at: https://www.cnbc.com/2025/08/03/chinas-byd-posts-first-decline-in-ev-sales-as-competition-heats-up.html
- The slowing growth of plug-in hybrid electric vehicles (PHEVs), a significant revenue contributor for BYD, is a major factor contributing to the company's economic and social policy challenges, as the shift towards battery electric vehicles (BEVs) is being hampered by stagnation in the PHEV market.
- Increased global trade barriers and tariffs, such as those in the European Union, are creating cost and pricing pressures that are further straining the finance and business operations of BYD, especially in key expansion markets.
- As the electric vehicle (EV) market in China experiences a slowdown and buyers hesitate in light of price pressure, startups with smart technology and political forces pushing for stability are putting additional pressure on companies like BYD, potentially contributing to market consolidation.
- Despite the challenging economic and social policy landscape, BYD remains committed to investing in technology, particularly research and development, aiming to navigate these hurdles and maintain its growth trajectory, thanks to strategic partnerships that offer access to valuable resources and credibility in exports.
