On May 23, 2025, BYD launched a sweeping new round of price cuts across 22 innovative driving models, slashing prices by up to 53,000 yuan (approx. 7,300 USD). The promotion covers key products under both its Dynasty and Ocean series, with the Seagull with advanced driver-assistance now starting at 55,800 yuan (approx. 7,700 USD) and the Seal 07 DM-i dropping to 102,800 yuan (approx. 14,400 USD) after BYD and government subsidies. This marks BYD’s third price reduction campaign since late March, intensifying its effort to offload stock and defend market share in an increasingly saturated EV sector.

The announcement sent shockwaves through the auto industry. Major players, including Geely, Chery, and SAIC-GM, responded swiftly with their limited-time discounts and trade-in incentives. Geely’s Geome Xingyuan now starts at 59,800 yuan (approx. 8,400 USD), directly challenging BYD’s Seagull and Dolphin. Chery slashed the Tiggo 3X to just 34,900 yuan (approx. 4,900 USD) under a 10 billion yuan (approx. 1.4 billion USD) subsidy campaign. Buick’s Envision and LaCrosse were re-priced at fixed rates of 169,900 yuan (approx. 23,900 USD) and 159,900 yuan (approx. 22,500 USD), respectively.

Industry groups and regulators reacted with growing concern. The China Association of Automobile Manufacturers (CAAM) and the Ministry of Industry and Information Technology (MIIT) issued public warnings against “disorderly price wars,” citing a drop in industry-wide profit margins, from 4.3% in 2024 to 3.9% in Q1 2025, as evidence of escalating destructive competition. State media echoed these concerns, with the People’s Daily warning that aggressive discounting could repeat the mistakes of the motorcycle industry, which was eventually driven out of Southeast Asia by unsustainable pricing.

Corporate voices have also joined the chorus of discontent. Great Wall Motors Chairman Wei Jianjun likened the situation to an “Evergrande of the auto sector,” accusing BYD of relying on debt and squeezing suppliers. Chery’s Chairman, Yin Tongyue, described the company’s participation in price cuts as “coerced.” Geely emphasised the need to compete on value rather than price. Behind the scenes, some executives fear quality degradation, such as downgrading body steel or essential components, to meet lower pricing.

Downstream effects are already being felt. A dealership in Jinan, Shandong, collapsed under inventory pressure and cash flow strain, leaving customers unable to register their new vehicles. Suppliers are also under pressure, with reports indicating BYD demanded component price cuts of 20–30%, forcing many into “volume-for-price” compromises.

Analysts point to multiple drivers behind BYD’s strategy. The company has set an ambitious 5.5 million unit sales target for 2025, yet only 1.38 million units were sold in the first four months, putting it far behind pace. Its strong vertical integration (over 90% in-house battery supply) and falling lithium carbonate prices (from 600,000 yuan to 60,000 yuan per ton, or approx. 82,000 to 8,200 USD) give it a cost advantage, enabling price cuts while maintaining gross margins of around 20%.

Beyond short-term sales gains, BYD is playing the long game: accelerating industry consolidation and reshaping the competitive landscape. With over 3.5 million units of unsold inventory across the market, the company aims to expand its share in the sub-100,000 yuan (approx. 14,000 USD) EV segment, where its current market share is just 7.4%, despite a penetration rate of 82%.

The financial markets have responded sharply. On May 23 and 24, BYD’s stock plunged over 10% in Hong Kong, wiping out more than 100 billion yuan (approx. 13.8 billion USD) in market value. However, some analysts remain optimistic, citing BYD’s 2024 net profit of 40.2 billion yuan (approximately 5.5 billion USD) and R&D investment of 54.2 billion yuan (approximately 7.5 billion USD) as signs of continued financial health.

For consumers, the discounts mean access to smart driving features like L2 assistance, ventilated seats, and advanced infotainment systems for under 100,000 yuan (approx. 14,000 USD). Yet industry insiders caution that cost-cutting could lead to hidden compromises, such as swapping ABS/ESP systems for cheaper alternatives.

Regulators increasingly warn that cutthroat competition could undermine the industry’s long-term sustainability. The China Association of Automobile Manufacturers (CAAM) forecasts that the domestic automotive market will eventually consolidate into 5-7 dominant brands. Leading Chinese automakers such as BYD and Geely are intensifying pressure on joint venture (JV) brands through a dual strategy of technological innovation and aggressive pricing. Japanese models like the Toyota Corolla/ Levin are reportedly slashing prices by 40,000 yuan (approx. 5,500 USD) in Shanghai to stay competitive.

Ultimately, this price war reveals the deeper tensions between market expansion and technological advancement in China’s transitioning auto industry. Ministry of Industry and Information Technology (MIIT) is stepping in to curb excessive price wars, and the sector may soon enter a new phase of “differentiated competition.” The next battlegrounds will likely shift toward breakthrough technologies and global expansion, moving beyond domestic price-slashing tactics.