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Chinese electric vehicle manufacturer BYD experienced a significant stock decline on Monday, with shares falling to their lowest level in approximately one year after reporting disappointing January sales figures. The BYD stock decline was triggered by weaker-than-expected sales data, as the company’s Hong Kong-listed shares dropped 6.9 percent to HK$91, while mainland-listed shares in Shenzhen fell 4.2 percent to 87.05 yuan.
The sharp decline marked the biggest one-day percentage drop for BYD shares since May 26, 2025, according to market data. The selloff extended beyond BYD, affecting other major Chinese automaker stocks including Geely, Leapmotor, Xiaomi, and Xpeng, which all posted losses ranging from 1.2 percent to 6.8 percent during the trading session.
Revised Subsidy Scheme Impacts Sales Performance
The weak January sales figures have been attributed to changes in China’s subsidy scheme, which particularly affected budget car brands. According to Eugene Hsiao, head of China equity strategy at Macquarie Capital, investors were surprised by the magnitude of the domestic sales decline. The data suggests BYD suffered a sharp loss in market share within its home market.
The selloff highlights growing investor concerns about a potential prolonged slowdown facing Chinese carmakers. Analysts point to softening demand in the domestic market combined with less generous policy support from the government as key factors driving the downturn.
Competitive Pressures Mount for Chinese EV Makers
Chinese automakers are confronting multiple challenges simultaneously as the market environment becomes increasingly difficult. Intense price competition among manufacturers has steadily eroded profit margins, while technological advantages that once separated leading brands from competitors have narrowed considerably.
Additionally, hopes that robust export sales could compensate for weak domestic performance are being scaled back. The combination of these factors has created a difficult operating environment for even the largest players in China’s electric vehicle sector.
Market Share Concerns Drive BYD Stock Decline
Macquarie’s Hsiao indicated that a meaningful turnaround in domestic demand is unlikely until BYD launches new models offering higher value for money. The analyst noted that rising competitors in the Chinese EV space have intensified pressure on established manufacturers to maintain their market positions.
However, the company faces the challenge of introducing competitive new products while managing margin pressures from ongoing price wars. The January sales data suggests BYD may be losing ground to rivals who are offering increasingly attractive value propositions to Chinese consumers.
Meanwhile, the broader selloff in Chinese automaker stocks reflects systemic concerns about the industry’s growth trajectory. The sector had previously benefited from generous government subsidies and strong domestic demand for electric vehicles, but both of these tailwinds appear to be diminishing.
Industry Outlook Remains Uncertain
The automotive industry in China continues to face uncertainty as manufacturers navigate changing policy landscapes and evolving consumer preferences. In contrast to previous years when electric vehicle sales showed consistent growth, the current environment presents more challenging conditions for sustained expansion.
Market observers will be watching closely for BYD’s response to the sales challenges and whether the company can regain momentum in coming months. The timing and success of new model launches will likely prove critical to stabilizing investor confidence and reversing recent market share losses in the competitive Chinese automotive market.
