BYD Cuts Factory Shifts as Inventory Surges 30%

- BYD reduces production capacity amid declining domestic sales. - Rising inventories and aggressive price reductions strain profitability. On June 25, 2025, Reuters reported that China’s largest electric vehicle (EV) manufacturer, BYD, has significantly scaled back its production capabilities. The company has canceled all night shifts at no fewer than 4 factories and has delayed adding new assembly lines. Reports indicate BYD has reduced production at several facilities by up to one-third of full capacity. This decision comes as the company grapples with slowing domestic sales, rising inventory levels, and an intensifying price war. According to Cryptopolitan on June 25, BYD’s year-on-year output growth for April and May 2025 slowed considerably. CnEVPost reported on June 25 that its monthly production has dropped nearly 30% on average compared to the final quarter of 2024. Asia Financial also noted on June 25 that dealers face extended inventory challenges; consequently, they hold approximately 3.2 months’ worth of stock, which is more than double the market's overall average. Aggressive pricing measures have further pressured profitability. For instance, BYD reduced the price of its entry-level model to approximately $7,800, an action that subsequently set off a price war in the highly competitive Chinese EV market. While BYD introduced these discounts to maintain sales momentum, they have consequently cut into profit margins and increased financial strain on dealers. The company had set a goal to sell approximately 5.5 million vehicles in 2025, a nearly 30% rise from the 4.27 million EVs it sold in 2024. However, missed sales targets thus far have prompted BYD to scale back production as part of a broader cost-control strategy. In addition, on June 25, industry groups, including the China Auto Dealers Chamber of Commerce, issued warnings. They cautioned that overproduction poses risks to supplier and dealer networks, and these warnings increased the urgency for production adjustments. Despite domestic setbacks, BYD remains focused on global expansion. For example, between January and May 2025, BYD exported roughly 350,000 vehicles out of the 1.76 million it sold, targeting markets in Southeast Asia, Europe, and Latin America. Moreover, strong sales momentum in countries like the UK continues to bolster its international market share. Looking ahead, BYD plans to focus on releasing cost-effective models and advancing its battery technology to sustain its growth trajectory.