Leaked BYD Document Suggests Escalating Price Competition in China's EV Sector -

BYD Co has asked its suppliers to agree to price cuts for the upcoming year, indicating that the Chinese electric vehicle manufacturer is preparing for a heightened level of price competition in the world’s largest automotive market.

An email purportedly from the Shenzhen-based company surfaced on social media on Wednesday, requesting a 10% price reduction from an unnamed supplier starting in January.

“Annual negotiations with suppliers are standard in the automotive industry,” Li Yunfei, BYD’s director of public relations and branding, stated in a Weibo post about the email on Wednesday. “We propose price reduction targets to suppliers. These are not compulsory demands. We are open to negotiations.”

The email implies that the EV manufacturer is preparing to face further price reductions in the coming year. The ongoing price competition in China’s automotive market, which has persisted for at least two years, has triggered a wave of consolidation and left smaller companies struggling.

Western automakers such as Volkswagen AG and Stellantis NV have formed partnerships with Chinese firms like Xpeng Inc. and Zhejiang Leapmotor Technology Co to leverage their expertise in electric vehicles, while luxury EV brands like HiPhi and Shanghai-based WM Motor are currently undergoing bankruptcy proceedings.

BYD has navigated this tumult largely unscathed, if not emerging more robust. Earlier this year, it initiated a new wave of price reductions across the industry, effectively capturing market share and applying pressure on weaker rivals.

The company continues to record unprecedented levels of revenue and profit. In the most recent quarter, its revenue exceeded that of Tesla Inc. for the first time, with its gross margin increasing to 21.9%, the highest it has been in a year.

BYD has established itself as China’s top car brand, with around 3.2 million plug-in hybrid and electric vehicles sold this year, including a record half a million in October. It is on track to sell at least 4 million units by the year’s end.

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