The new round of price war initiated by China's electric vehicle leader BYD has led to its market value evaporating by 20 billion USD (approximately 84.6 billion RMB) in just two weeks.
According to a report by Bloomberg, BYD's Hong Kong shares have dropped 11% after recently hitting a historical high, as investors worry that the fierce price war will further squeeze corporate profit margins. Additionally, elevated valuations and rising short selling sentiment have further pressured the stock price.
On the morning of the 6th, BYD's Hong Kong shares fell by 1.3%. Currently, the short selling ratio of BYD's stock has risen to its highest point in nearly three months.
Last month, BYD announced price cuts of up to 34% on 22 models, marking a new phase in the three-year-long electric vehicle price war.
● Prohibition on Unreasonable Price Cuts
According to Bloomberg, earlier this week, Chinese authorities convened a meeting in Beijing with the leaders of more than a dozen car companies, including BYD, urging self-regulation and prohibiting the sale of cars below cost or unreasonable price cuts.
Informed sources revealed that the meeting was jointly convened by China's Ministry of Industry and Information Technology, the State Administration for Market Regulation, and the National Development and Reform Commission. More than a dozen car company executives attended, including those from Geely Auto and Xiaomi Auto.
During the meeting, Chinese officials urged car companies to engage in “self-regulation” and avoid selling cars below cost or engaging in unreasonable price cuts. The sources mentioned that the meeting also discussed issues such as "zero-kilometer" second-hand cars and the increasing unpaid debts to suppliers, which squeezed the cash flow in the supply chain and increased the invisible debt of car manufacturers.
The report stated that it is rare for Chinese regulatory authorities to jointly hold a meeting with the automotive industry to discuss pricing and other operational issues.