BYD’s electric car and plug-in hybrid output declined for the second straight month in August, indicating a rare slowdown for the Chinese automaker following years of strong expansion.
The world’s largest EV manufacturer produced 353,090 vehicles this month, a 3.78% decrease from the previous year, according to a Hong Kong Stock Exchange report.
This comes after a 0.9% drop in July, marking the first time the corporation has reported consecutive monthly reductions since mid-2020.
Output and sales under pressure
The cutback in output is a sign of a wider slowdown in momentum for BYD.
The company previously announced plans to cut shifts at certain Chinese factories and postpone the installation of fresh production lines, as reported earlier this year.
These changes point to a more conservative stance as BYD contends with a cooling in domestic demand and intensifying competition.
Sales figures reflect the strain. In China, which accounts for almost 80% of the company’s total, deliveries dropped 14.3% year on year to 292,813 units in August.
That represented the fourth straight monthly drop in the home market for the automaker. But global sales managed to rise slightly, due to faster growth in Europe, which BYD is entering aggressively.
Behind target on annual goal
BYD has accomplished just 52.1% of its ambitious 2025 sales target of 5.5 million vehicles through the first eight months of the year, state figures show.
Concerns about whether the company will ever reach that milestone have been raised by analysts.
Most recently, China Merchants Bank International cut its sales forecast for BYD by 5% to revise its expectations for BYD down to 4.9 million units, saying it is seeing signs of prudence in inventory management from the automaker.
That dim outlook follows BYD’s first quarterly profit drop in three-and-a-half years, a sign that competition and softer margins are beginning to take their toll.
Market reaction and investor concerns
BYD shares fell dramatically on Monday on the announcement of production and sales statistics, indicating investor concern about the company’s future trajectory.
The back-to-back drop in output contrasts with the general industry trend, which saw EV sales increase 34.4% year on year in August and manufacturing rise 26%.
BYD’s declining output and slower sales growth show the challenges of maintaining pace in an increasingly competitive market.
Tesla remains the company’s most visible overseas opponent, but Chinese rivals are increasingly expanding their offers, increasing pricing rivalry.
Transitioning from hybrids to EVs
A significant adjustment in BYD’s portfolio is also underway. Since April, the business has manufactured and sold more battery-electric vehicles than plug-in hybrids.
While EV output continues to grow, PHEV production and sales have been declining since April, lowering overall volumes.
The company’s shift to pure electric vehicles is consistent with worldwide trends, particularly in Europe, where government pressure and market demand favour zero-emission vehicles.
However, in China, where PHEVs have been popular, the switch may be causing short-term challenges.
Expansion meets limits
The pullback from BYD comes as a stark contrast to its rapid-scaling trajectory over the last few years, when the company raced past competitors worldwide to cement its position as the world’s largest EV maker.
The most recent deceleration hints that the automaker is adjusting its strategy as growth in its primary market cools.
Thus far, overseas sales are propping up soft trends domestically, but the dependence on China is still meaningful.
If the Chinese consumer does not steady itself, it will be hard (if not impossible) for BYD to keep the growth rates that have characterised its meteoric rise, of course, depending on domestic demand.
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