BYD’s aggressive pricing strategy appears to be paying off — the Chinese EV maker recently overtook Tesla in revenue for the first time, reporting a gross margin of 21.9 per cent, its highest in a year
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If some auto experts are to be believed, BYD, is the only EV company that Tesla’s Elon Musk is afraid of. If that is the case, the eccentric billionaire CEO has more reasons to be worried about China’s, and possibly the world’s largest electric vehicle (EV) manufacturer. BYD is preparing to escalate the already intense price war in the world’s largest auto market.
A leaked email circulating on social media suggests the company is negotiating for a 10 per cent price reduction from suppliers starting January, a move seen as strategic positioning for another year of aggressive market competition.
Negotiations or pressure?
In response to the email leak, BYD’s public relations and branding director, Li Yunfei, clarified on social media that annual negotiations with suppliers are standard in the automotive industry. He noted that while BYD has set price reduction targets, these are not mandatory and remain open for negotiation.
The leaked email highlights BYD’s readiness to further tighten its costs, a critical move as price cuts continue to dominate China’s auto market. The price war, now in its third year, has reshaped the industry, forcing smaller players out and encouraging partnerships between Western automakers like Volkswagen AG and Chinese EV specialists such as Xpeng Inc.
BYD’s resilience amid industry turmoil
Unlike some of its rivals, BYD has not only weathered the price war but emerged stronger. Earlier this year, it initiated a fresh wave of price reductions, successfully boosting its market share while squeezing weaker competitors. The strategy appears to be paying off — BYD recently overtook Tesla in revenue for the first time, reporting a gross margin of 21.9 per cent, its highest in a year.
As other Chinese EV brands like HiPhi and WM Motor face bankruptcy, BYD continues to expand its dominance. The company’s ability to adapt and innovate has cemented its status as the best-selling car brand in China, with sales of approximately 3.2 million plug-in hybrid and electric vehicles this year. October alone saw a record-breaking half-million cars sold, putting BYD on track to exceed 4 million units by year-end.
The road ahead for the world’s largest EV maker
BYD’s aggressive cost-cutting measures signal that the price war is far from over. The move could deepen industry consolidation, challenging smaller automakers while intensifying competition for international players looking to carve out a slice of China’s EV market.
As the EV market matures and competition sharpens, BYD’s strategy of leveraging scale, cutting costs, and capitalising on market momentum positions it as a formidable force. The coming year will test how effectively BYD — and its competitors — can navigate an increasingly cutthroat landscape.
