China’s electric vehicle giant BYD is recalibrating its growth strategy, slowing production and delaying factory expansions in response to rising inventory and cooling domestic demand, Reuters news report said.
Once the most aggressive force in the EV sector — surpassing Tesla as the world’s largest EV maker — BYD is navigating a more complex phase marked by intensifying competition and changing consumer sentiment.
The International Energy Agency’s (IEA) Global EV Outlook 2025 said electric vehicle (EV) sales worldwide surpassed 17 million units in 2024 and projected to exceed 20 million by the end of 2025. EVs now account for over 20 percent of global new car sales, with the IEA forecasting that this share could reach between 25 percent and 40 percent by 2030.
China continues to dominate the global EV market, representing half of global sales in 2024, driven by highly competitive pricing and robust domestic manufacturing. In fact, two-thirds of EVs sold in China last year were less expensive than equivalent petrol or diesel cars, even without subsidies.
Production Revision and Cost Containment
Over the past few months, BYD has reduced output at several factories across China, cutting shifts — particularly night shifts — and scaling back at least a third of capacity at selected sites. The company has also postponed plans to install new production lines at some locations. The move reflects a deliberate shift from high-volume production to cost optimization, especially after recent sales failed to meet internal targets.
Though BYD aimed to grow sales by nearly 30 percent in 2025 to reach 5.5 million vehicles, actual output growth in April and May slowed significantly — down to just 13 percent and 0.2 percent year-on-year, respectively. Average production in these two months was 29 percent lower than Q4 2024, signaling a break from its previous pattern of continuous quarterly expansion.
Strategy Pivot: From Hypergrowth to Stabilization
The strategic shift comes after years of rapid capacity buildup, aggressive pricing, and market share capture. BYD’s recent decision to slash prices — bringing its most affordable model down to 55,800 yuan (about $7,800) — sparked a fresh wave of discounting across the Chinese EV sector. While these price cuts temporarily boosted volumes, they also triggered margin compression and dealer pushback.
BYD now faces pressure to strike a balance between volume growth and financial sustainability. Dealer inventory levels have surged to an average of 3.21 months — more than double the industry average — raising concerns over overproduction and unsold stock. One major dealer group in Shandong province even ceased operations amid mounting costs and slow turnover.
EV Buying Trends: Demand Normalization and Export Focus
After years of explosive growth, EV demand in China appears to be stabilizing. Consumers, once quick to adopt newer, cheaper models, are becoming more cautious amid economic uncertainty and the saturation of the domestic market. Price wars have created a deflationary mindset among buyers, with many delaying purchases in anticipation of further discounts.
To counter slowing local momentum, BYD is turning to international markets. In the first five months of 2025, the company exported about 20 percent of its 1.76 million total vehicle sales. Southeast Asia, Latin America, and Europe remain key targets for further expansion.
Outlook
BYD’s current recalibration marks a new chapter: from scale-driven dominance to disciplined growth. While it remains a global EV leader, the company must now manage dealer relationships, reduce excess inventory, and ensure its price-led strategy doesn’t erode long-term profitability. A sharper focus on international markets and product innovation may be crucial as the next wave of global EV competition unfolds.
GreentechLead.com News Desk