BYD Intensifies EV Price War: Leaked Email Reveals Supplier Squeeze
In a bold move that signals an escalation of the already fierce electric vehicle (EV) price war in China, BYD, the country’s leading EV manufacturer, has reportedly asked its suppliers to accept significant price cuts for the coming year.
This development, revealed through a leaked email circulating on social media, underscores BYD’s aggressive strategy to maintain its market dominance while expanding into new territories.
The Leaked Email and Its Implications
The leaked letter, purportedly from BYD executive vice president He Zhiqi, demands a 10% price reduction from suppliers starting January 2025. While BYD’s PR and branding director, Li Yunfei, downplayed the leak as “annual bargaining” and “not mandatory,” the move has sent shockwaves through the industry.
This price-cutting initiative comes at a time when BYD is experiencing unprecedented growth:
- BYD has sold approximately 3.2 million plug-in hybrids and battery electric vehicles (BEVs) this year.
- The company achieved a record-breaking 500,000 vehicle sales in October alone.
- BYD’s net profit rose to 11.6 billion yuan ($1.63 billion) in July-September.
- Third-quarter revenue increased 24% year-on-year to $28.24 billion, surpassing Tesla for the first time.
The Intensifying EV Price War
BYD’s aggressive pricing strategy is not new. The company has been at the forefront of an intense price war in China for the past two years. This competition has had far-reaching effects:
- Smaller companies have been pushed to the brink of collapse.
- Industry consolidation has accelerated, with companies like Volkswagen and Stellantis partnering with Chinese brands.
- Some EV makers, such as HiPhi and WM Motor, have filed for bankruptcy.
BYD’s Expansion Plans
Despite the challenges, BYD is not slowing down:
- The company is ramping up production by nearly 200,000 units to meet demand.
- BYD has hired approximately 200,000 new employees over the past three months.
- The automaker aims to double its exports to 450,000 vehicles this year, pushing hard into European and other markets despite higher tariffs.
Industry-wide Impact
The ripple effects of BYD’s pricing strategy are being felt across the automotive industry:
- Other manufacturers, such as Maxus (under state-owned SAIC Motor), also request supplier price cuts.
- Following the news, suppliers like Chongqing Sulian Plastic and Alnera Aluminium have dropped stock prices.
- Concerns about the impact on workers’ livelihoods, including speculation about potential salary cuts in an already challenging job market, exist.
As the EV market in China enters what He Zhiqi calls a “decisive battle and knockout rounds,” BYD’s latest move demonstrates its determination to maintain its competitive edge. However, the strategy also raises questions about the sustainability of such aggressive pricing and its long-term impact on the industry’s ecosystem.
With BYD’s market share continuing to grow and its global ambitions expanding, the coming year promises to be pivotal for the Chinese EV giant and the automotive industry.
As the price war intensifies, all eyes will be on how competitors respond and whether BYD can maintain its momentum in this high-stakes race for EV dominance.