Leaked BYD letter signals China electric vehicle price war is set to intensify

BEIJING - BYD has asked suppliers to accept price cuts in 2025, in a sign that the Chinese electric vehicle (EV) maker is preparing for the brutal price war in the world’s biggest car market to intensify.

A screenshot of an e-mail purportedly from the Shenzhen-based car giant was circulating on social media on Nov 27, demanding 10 per cent price cuts from an unnamed supplier from January.

“Annual bargaining with suppliers is a common practice in the automotive industry,” Mr Li Yunfei, BYD’s public relations and branding director, said in response to the e-mail in a Weibo post on Nov 27.

“We put forward price reduction targets to suppliers,” he added. “They’re not mandatory requirements. We can negotiate.”

The e-mail indicates the EV maker is positioning itself for further discounts in the coming year. The price war in China’s car market, which has raged for at least two years, has driven a wave of consolidation and pushed smaller players to the brink.

Western carmakers such as Volkswagen and Stellantis have teamed up with Chinese manufacturers Xpeng and Zhejiang Leapmotor Technology to try to leverage their EV expertise, while premium EV brand HiPhi and Shanghai-based WM Motor are mired in bankruptcy proceedings.

BYD has so far come through the turmoil largely unscathed, if not strengthened. The company set off a new round of industrywide price cuts earlier in 2024, gaining market share and squeezing weaker rivals.

The carmaker continues to deliver record levels of sales and income. In the most recent quarter, BYD’s revenue overtook Tesla’s for the first time and its gross margin rose to 21.9 per cent, its highest level in a year.

The EV maker has grown to become China’s best-selling car brand, having sold around 3.2 million plug-in hybrid and electric vehicles in 2024, including a record half a million cars in October. It is on track to sell at least four million units by the end of the year. BLOOMBERG