BYD Stock Plunges to 9-Month Low, Signaling Potential Challenges in the Electric Vehicle Market

BYD, China's electric vehicle giant, hit its lowest stock price in nearly nine months as sales dropped for the second straight month. The Shenzhen-based company lost its top spot in China's car market to rival SAIC Motors, marking a sharp reversal for what was once the country's fastest-growing automaker.

BYD reported October sales of 441,706 vehicles, down 12% from the same month last year. The stock fell 1.9% to HK$98.70 in Monday morning trading, heading toward its lowest close since February 5. Shares have now dropped 36% from their late-May peak.

The sales decline continues a rough stretch for BYD, which posted its second consecutive quarterly profit drop last week. Chinese authorities cracked down on excessive discounting earlier this year, which hurt one of BYD's key marketing strategies. The company had relied heavily on price cuts to drive sales growth.

SAIC Motors now leads China's car market after shipping 453,978 vehicles last month, pushing BYD to second place. This shift matters because China represents the world's largest EV market, and losing domestic leadership could signal broader competitive challenges.

BYD faces a math problem for the rest of 2024. Despite October being its best sales month this year, the company needs to exceed that performance in November and December to meet analyst expectations. Morgan Stanley estimates BYD needs to ship around 4.6 million vehicles annually.

So far this year, BYD has sold 3.7 million vehicles. That means deliveries must average 450,000 cars monthly for the remaining two months to hit forecasts. The company managed 441,706 in October, so it needs to step up the pace significantly.

For investors, BYD's stumble shows how quickly fortunes can change in China's competitive EV market. The company benefited from early government support and aggressive pricing, but those advantages are fading as competition intensifies and regulatory support shifts.