According to a Reuters article, China’s biggest electric vehicle maker (EV), BYD is slowing its production plans and expanding.
BYD, according to sources cited by the agency, has cancelled night shifts at multiple factories in China and reduced output at least a third.
BYD has at least four production facilities.
The move was attributed to cost savings efforts by one source, and the underwhelming results of sales were cited as the cause for the second.
In addition, the company has paused some of its planned new production lines. This reflects a wider reassessment on output goals amid increasing price competition in China and a slowing down market momentum.
What is the pressure on BYD?
BYD sold nearly 4 million cars in China in 2023. It was the largest electric vehicle manufacturer in the world, surpassing Tesla in 2018.
The target was 5.5 millions units, a nearly 30% increase. However, signs indicate that the company may not be able to meet this goal.
Reports suggest that despite a series of price reductions — including the lowering of its entry-level EV model’s price to only 55,800 Yuan ($7,800), reports indicate that sales have not kept pace with production.
The China Association of Automobile Manufacturers’ (CAAM) data shows BYD’s production growth year-on-year dropped to just 13% in the month of April, and only 0.2% in the month of May. These are the lowest rates seen since February 2024.
The production volumes of BYD in April and may were about 29% less than the average for the 4th quarter in 2024. This is a significant change from the previous ramp up seen over the past two years.
The demand for BYD is drying up?
A growing stock glut is behind the slowdown.
According to a survey conducted by the China Automotive Dealer Association in May, BYD dealers had an average inventory of 3,21 months — almost double the average industry average of 1,38 months.
According to the state-run media, a large BYD dealership in Shandong Province recently closed its doors. More than 20 outlets were found abandoned or shut.
Industry associations are calling for automakers to reduce their production goals and relieve pressure on dealers as the overhang of inventory grows.
Early in June, the China Auto Dealers Chamber of Commerce urged automakers not to overload dealerships with surplus stock and instead align production with sales.
The group said that price wars continue to erode profitability in the industry and cause liquidity problems.
The auto dealers also asked manufacturers to offer cashback incentives in 30 days, to help ease the financial strain. Many are facing increasing debts due to a highly competitive market.
Chinese regulators are paying more attention to the deepening discounts and shrinking margins.
As a result of concerns over systemic pressure on the entire EV supply chain, from suppliers through to end-dealers and assemblers, it is being examined whether or not this longstanding practice should continue.
Chinese automakers including BYD are responding by increasingly focusing on international markets in order to boost future growth.
BYD has sold 1,76 million cars in the first five years of 2025. About 20% of these vehicles were exported.
This move can be seen as a part of a larger diversification strategy to offset domestic weaknesses.
The post Tesla rival BYD reportedly is scaling back its production. Here’s why could be updated as new information becomes available
