BYD, according to Markkines, experienced a 2.6% decline in vehicle production in May 2025,producing 318,530 vehicles compared to teh same month last year. This is particularly noteworthy as the Chinese electric car market saw an increase of nearly 45% in the first quarter of the year. In contrast, BYD’s growth was only 5.5% during this period.

BYD’s domestic merchants saw stock levels rise to 3.2 months by the end of May, the highest in the sector. Following continuous expansion earlier in the year, BYD reduced its production capacity in May. According to Reuters, night shifts were stopped at several Chinese plants, expansion plans were suspended, and production was cut back by one-third in some locations.

The company has also intensified its price competition, with the entry-level “Seagull” model in China priced below 6800 euros. This has drawn criticism from industry leaders. For example, Case’s CEO described it as a “toxic price war,” and the founder of Great Wall likened BYD to “Evergrande.”

BYD is also employing a disputed sales practice, using “zero-kilometer” cars. This involves registering vehicles briefly inland to sell them as used,thus avoiding duties for new cars.Over twenty Chinese regions support this practice with logistics and tax breaks.

The company is dedicating notable resources to its European expansion, planning a $20 billion investment that includes a logistics network, sales points, and a new Hungarian plant. BYD delivers vehicles to Western Europe using six ships and has already exported over 70,000 cars.

Though, European market performance presents a mixed picture. In the UK, nearly 15,000 BYD models were sold between January and May, just below Tesla’s sales figures.In Germany,growth is primarily driven by car rental and fleet buyers; only 128 BYD models were registered for private customers in May.

Competition is intensifying in the Chinese market. Xiaomi’s new Yu7 model received 289,000 pre-orders in one hour, while sales of Xpeng, Geely, and Chery also experienced three-digit growth.

“toxic price war”

Thus, BYD faces increasing pressure both globally and domestically.

Overproduction, fierce price competition, disputed sales methods, and European retail demand are increasing challenges for the company. While BYD remains the world’s largest electric car manufacturer, it is becoming increasingly urgent to assess how long this growth model can be sustained, especially as the Chinese state is becoming more critical of the sector.