🕒 Last updated on September 10, 2025
China’s electric vehicle (EV) industry has grown at an incredible pace over the past decade. In the world’s largest car market, nearly half of all car sales today are either plug-in hybrids or fully battery-powered vehicles.
The rise of a powerful player
At the front of this race stands BYD, one of China’s most powerful EV makers. The company has expanded quickly at home and abroad, achieving a level of growth that has turned global heads.
BYD has managed to outperform some of its biggest international rivals in several key areas. In Europe, for example, its sales have overtaken those of Tesla for the first time. Outside China, the company’s sales more than doubled in the first half of the year, showing that its push to build recognition around the world is starting to pay off. Over the past five years, BYD’s share price has risen nearly fourfold, far ahead of its American competitor, which has gained a much smaller percentage during the same period.
In a congested market, this stance has made BYD a top brand. China currently has well over 100 EV makers, but industry experts believe only a small number will survive in the long term. With its size and success, BYD is seen as being well-placed to be among those survivors. But even leaders face challenges when the market becomes too crowded and too competitive.
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The bruising price war
One of the toughest challenges came in the form of a price war. For months, carmakers in China cut prices in an effort to attract buyers and increase their share of the booming EV market. BYD, thanks to its scale, was a leading force in this battle. Lowering prices helped boost demand but also created financial stress across the industry.
Recently, Chinese officials stepped in and called for an end to this price competition. The move was meant to calm a market where companies were hurting themselves by cutting too deeply. For BYD, this shift came just as new rules created further pressure on its finances.
Chinese authorities have begun mandating that automakers reimburse suppliers within 60 days. This may sound like a simple rule, but for BYD it meant a dramatic change in how it manages its money. The company had to more than halve its average payment times, which placed an extra burden on its short-term finances.
The impact was clear in its latest quarterly results. For the first time in years, BYD’s numbers missed forecasts. Its gross profit margin fell by around one percentage point, showing how difficult it had become to keep earnings strong while dealing with both falling prices and stricter payment rules. Analysts have responded by lowering their expectations. Some have cut as much as 30 percent from projected sales for 2027, and many have also reduced estimates for the company’s expected profits.
Despite this setback, BYD’s stock valuation remains steady. According to market data, the company trades at around 17 times its expected 2026 earnings. While this figure is not much different from its peak earlier in the year, it shows that the market has not lost confidence in the company entirely. Still, the challenges are real and continue to weigh heavily on the EV giant.
The struggle for survival in a crowded market
The EV industry in China is filled with dozens of carmakers, but not all of them can thrive. Experts suggest that in just a few years, only a small group will remain profitable. Predictions point to no more than 15 companies managing to record positive earnings within five years. Even having 20 players in the market could still be too many, according to industry watchers.
This looming shakeout means that many smaller EV brands may collapse, exit the industry, or merge with others. For BYD, a cleaner and more consolidated market could reduce competition and improve profitability. However, the process is not straightforward. Local governments across China often support smaller regional carmakers. These local projects, while important to communities, can stretch financial resources and keep weaker companies alive longer than the market can truly support.
For BYD, this adds another layer of difficulty. Competing in a crowded industry means that even the strongest brands must fight to maintain their edge. While it has shown resilience and global ambition, the weight of the car wars in China is clearly taking its toll.
The EV giant’s path remains shaped by the pressures of intense competition, regulatory changes, and the need to balance growth abroad with financial stability at home. The story of BYD is not just about success but also about the heavy price of leading in an industry that is undergoing one of the toughest battles in the modern global market.