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BYD Reported 30% Drop in Profits in the Second Quarter of 2025 Amid Price War in the Automotive Sector and Pressure from the Chinese Government.
After a cycle of continuous growth, BYD surprised the market by announcing its first retraction in profits in three years. In the second quarter of 2025, the Chinese automaker reported a 30% decline, totaling 6.4 billion yuan — about 772 million euros, as reported this Monday (09/08).
The contrast is even greater because, just in the first quarter of this year, the company had managed to double its profits.
Pressure from the Chinese Government and Price War
The trend reversal did not happen by chance. Analysts interviewed by Reuters indicate that the pressure from the Chinese government to curb the price war in the automotive sector was decisive.
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A taxi that takes off vertically, crosses 150 miles at a speed of 320 km/h, and lands without a runway has already completed 850 test flights in 2025, and is 100 times quieter than a conventional helicopter, which means it can operate over residential neighborhoods and enter commercial service as early as 2026.
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This topic was even discussed in a recent meeting between authorities and executives from the major local manufacturers. Beijing’s concern lies in the excess production and the risks of instability that this scenario may cause in the national economy.
Rising Domestic Competition
Another noteworthy point is the accelerated advancement of competitors in the domestic market. BYD, which until recently dominated significant sales shares, has been losing ground to other Chinese automakers.
According to consulting firm Jefferies, July marked the third consecutive month of declining sales for the company within the country, which had set an ambitious goal: sell 5.5 million vehicles only in the Chinese market in 2025.
However, by the end of July, 2.49 million units had been sold, equivalent to 45% of the annual target, already accounting for the beginning of the second half.
Experts point out that structural factors are eroding the company’s competitive advantage, which was previously sustained by cost cuts, production scale, and technology leadership. For this reason, consulting firm Jefferies downgraded its earnings forecasts for BYD for the period from 2025 to 2027.
Reactions from the Financial Market
The impact of the news was immediate on the stock exchanges. On the day of the announcement, BYD’s shares in Hong Kong fell by 5.2%. By the next morning, the accumulated decline had reached 8%. This movement reinforces investors’ distrust regarding the company’s ability to recover in the short term.
Even in light of this retraction, BYD remains among the most successful Chinese automakers in the world. In 2024, it was one of the few electric vehicle manufacturers to show consistent profit, which kept it as a benchmark in the sector.
Still, the recent performance serves as a warning for the international automotive market. Experts assess that the brand has lost some growth momentum and may fall short of projections until it finds new energy.
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