BYD Downshifts Production into First Gear

BYD has taken the lead, and as it comes around the bend, it’s … tapping its brakes?

According to a Reuters report last week, the Chinese car giant — which earlier this year surpassed Tesla as the world’s top EV seller by revenue — has started slowing production in recent months. The pullback comes as BYD makes major gains outside of China. So what gives?

On the Road

In March, BYD reported that its fourth-quarter revenue for fiscal year 2024 had jumped 73% year-over-year — pushing its total annual revenue past $100 billion, narrowly outstripping Tesla’s $97.7 billion 2024 revenue to become the top-selling EV company in the world. And crucially for BYD, that race is now taking place on highways (almost) the world over, not just in its home country, where it has long been a dominant player.

BYD is now the EV pace-setter in Europe, too, according to a recent report from automotive firm JATO Dynamics, which showed that BYD notched a 359% year-over-year surge in April sales in the region, outstripping Tesla. That comes even as BYD vehicles face a much higher tariff rate on the continent than Tesla (last year, the EU imposed punitive tariffs on BYD as it probed whether the company employed unfair pricing tactics).

Yet for all that success, BYD appears to be hitting the brakes extra hard: 

• According to sources who spoke to Reuters, the company has been canceling night shifts and has decreased output by as much as 33% at several factories. The company has also suspended some of its plans to launch new production lines, the sources said. Data from the Chinese Association of Automobile Manufacturers shows that output at BYD plants slowed 29% in April and May compared with the fourth quarter of 2024.
• The why remains unclear, with some sources telling Reuters it was a cost-saving measure and others saying it resulted from failing to meet recent sales goals. Some evidence suggests slowing sales: According to a China Automotive Dealer Association survey in May, BYD dealers held an industry-high average inventory of 3.21 months, well above the industry average of 1.38 months.

Xiaomi Too: The possible over-supply shouldn’t be that surprising. In June, the China Auto Dealers Chamber of Commerce released a statement urging automakers to stop offloading too many cars onto dealerships, as the resulting price wars were eroding profitability. Still, some Chinese automakers are roaring ahead on nitrous oxide. On Friday, shares of upstart EV player Xiaomi surged 5% to a record high after the company received 240,000 orders in just 18 hours for its new YU7 electric SUV model. Priced 4% lower than the Model Y in the country, Xiaomi is just another player breathing down the neck of Tesla, China’s once and perhaps not future EV king.