In a significant shift from its previous hyper-growth trajectory, Chinese new energy vehicle (NEV) giant BYD has reportedly cut its 2025 sales target by 16% due to a brutal price war and intensifying competition in its home market.
BYD, which initially set an ambitious goal of selling 5.5 million vehicles this year, is said to have lowered its internal forecast to 4.6 million units. This decision marks the company’s slowest annual growth rate in five years and comes amid intensifying competition and slowing growth in China, the world’s biggest market for new energy vehicles.
Earlier this week, BYD reported its August deliveries. The Chinese auto giant delivered 373,626 NEVs in August, of which 199,585 were battery electric vehicles (BEVs). The company’s deliveries rose both on a yearly and sequential basis last month. Notably, BYD lost momentum in July and its deliveries fell 10.6% compared to June.
In the first eight months of 2025, BYD delivered over 2.8 million NEVs, 23% higher than the corresponding period last year.
BYD has been facing intense competition from Geely and Leapmotor, particularly in the budget segment cars that sell below 150,000 yuan ($21,000). Both Geely and Leapmotor have gained market share in the affordable EV market, and their sales have been growing much faster than the industry.
In May, BYD announced that it would cut prices on 22 of its models until the end of the quarter. The cuts, which were across BEVs and plug-in hybrids (PHEVs), were quite aggressive, and the company slashed the price of its Seagull hatchback by 20%. The model, which is the cheapest from BYD, cost just about 55,800 yuan (around $7,780) after the cut. The biggest cut was for the Seal dual-motor hybrid sedan, whose price was slashed by 34%.
Notably, a brutal price war has been ongoing in the Chinese EV industry since Q4 2022, when Tesla began cutting car prices to spur sales.
Tesla’s price cuts were followed by similar announcements from other carmakers, including Xpeng Motors, Ford, Toyota, and Nissan. In 2023, even NIO lowered car prices. Previously, the company had categorically said that it wouldn’t join the price war.
The China Association of Auto Manufacturers (CAAM) tried to bring about a truce in the price war in 2023, but that effort failed.
A total of 16 automakers, including Tesla (which was the only foreign automaker in the lot), signed the pledge at an industry conference in Shanghai, which stated they “take on the heavy responsibility of maintaining steady growth, strengthening confidence and preventing risks.”
However, the truce failed, and shortly, CAAM retracted the pledge and said that the EV price war agreement violated China’s antitrust law.
The Chinese government cracked down on the EV price war again and urged carmakers to ease up on the “involution,” or self-destructive competition, that the price war has created. This has limited BYD’s ability to rely on aggressive discounting, a primary tool in its arsenal. Additionally, regulators have scrutinized other practices, such as subsidy fraud and a practice of briefly registering new cars to boost sales figure
While the price cuts helped BYD buoy deliveries, they took a toll on its profits. For instance, while the company’s Q2 revenues rose 14% year-over-year, its net profits tanked 30%, far worse than expected. Moreover, it was the first time in three years that the company’s profits fell in any quarter.
For BYD, the lower sales target means a strategic recalibration. The company is now pivoting toward premiumization and hybrid models to boost margins. It is also focusing on localized production in key international markets to bypass trade barriers. While its shares have slipped, analysts believe the revised target is more achievable and could represent a “clearing event” for the stock, allowing investors to move forward with more realistic expectations.
Notably, in March, BYD unveiled its “Super e-Platform” technology, which is capable of peak charging speeds of 1,000 kilowatts and will allow cars to achieve a range of 400 kilometers in only 5 minutes.
Fast charging, access to more charging stations, and a higher range are among the factors that can boost EV adoption and get more fence-sitters to buy an electric car. Importantly, a battery is the most important hardware component of an EV and is the costliest as well.
Earlier this year, BYD released an assisted driving system named “DiPilot” in partnership with DeepSeek. The Chinese AI (artificial intelligence) startup created waves with its low-cost AI model, which performed better than models from OpenAI and Meta Platforms on some parameters. BYD would offer assisted driving for free and would become the only automaker offering these features in cars priced below $10,000.
While one may argue that players like Tesla and Xpeng Motors offer a more advanced version of autonomous driving, BYD’s offering of assisted driving for free raised fears about other companies’ ability to charge premium pricing for their self-driving features.
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