### China's Electric Vehicle Price War Intensifies with BYD's Price Cuts

China's electric vehicle (EV) market faces increasing turbulence as BYD, one of its prominent players, announced significant price reductions, triggering a wave of concern among investors. On Monday, shares in several leading Chinese EV manufacturers experienced sharp declines following BYD's announcement.

The recent price cuts by BYD, disclosed last week, have affected 22 of its electric and hybrid models. Notably, the price of the already economical Seagull electric hatchback has been slashed from 69,800 yuan ($9,700) to 55,800 yuan ($7,750), according to a post on BYD's Weibo channel. This move has raised alarms over the sustainability of the highly competitive EV sector in China.

Investors responded swiftly to the news. BYD's stock plummeted by 8.6% in Hong Kong by the end of Monday, a stark contrast to the record highs it had reached just a week prior. Moreover, shares in the auto conglomerate Geely tumbled by more than 9%, while those of pick-up manufacturer Great Wall Motors fell over 5%. Other notable companies such as Xpeng, Nio, and Li Auto also posted declines.

The price war in China's EV market was initially ignited by Tesla last year, leading to fierce competition among roughly one hundred brands vying for dominance in the world's largest automotive market. Industry leaders caution that this intense rivalry is not sustainable. Many up-and-coming Chinese EV startups continue to report significant quarterly losses despite the aggressive pricing strategies.

Thomas Schäfer, CEO of Volkswagen, previously described the price conflict as "ruinous," emphasizing that such aggressive competition cannot persist indefinitely. Similarly, the CEO of Xpeng warned last year that the majority of Chinese car manufacturers might not survive the coming decade.

Despite the ongoing price battle, BYD's sales have been strong this year, not just in the domestic market but also internationally. The company is set to sell over 5 million cars this year, and it outperformed Tesla in EV sales in Europe for the first time in April. Adding to its global footprint, BYD recently unveiled the Dolphin Surf, the European version of the Seagull, which will be available in fifteen European markets starting in June at a price of 23,000 euros ($26,000), making it significantly cheaper than Tesla's least expensive model.