CLSA’s latest report reveals that BYD Company (01211.HK) has sparked this year’s electric vehicle (EV) price war by slashing prices on key models. The Ocean and Dynasty series now carry additional discounts of RMB 10,000–30,000 (excluding national trade-in subsidies), with the flagship Qin Plus model’s retail price reduced sharply from RMB 79,800 to RMB 63,800.
The price cuts come as BYD aims to meet ambitious annual sales targets—a move CLSA says was anticipated. The broker expects robust EV market growth this year to provide enough scale economies to absorb the impact of such discounts. This growth is projected to support the annual sales goals not only for BYD but also for peers Geely Auto (00175.HK) and Leapmotor (09863.HK).
However, CLSA warns that smaller, non-leading OEMs will face significant challenges. The industry’s future profitability will depend heavily on the pace of consolidation, with overall domestic margins expected to decline in coming quarters. OEMs with strong overseas markets are better positioned to offset discount pressures, which should help stabilize BYD’s margins.
On investor sentiment, CLSA notes that while price wars may unsettle markets in the short term, intensified competition will ultimately accelerate industry consolidation. Historical trends show stock prices respond more to long-term fundamentals than temporary pricing moves. The broker views Geely, BYD, and Leapmotor as better positioned to navigate current market volatility. Meanwhile, joint-venture brands’ internal combustion engine vehicles (ICEVs) and models priced between RMB 150,000 and RMB 250,000 are likely to face further price cuts.
