In the first signs of a slowdown in its breakneck growth, Chinese electric vehicle giant BYD is cutting back on production and delaying plans to expand its existing factories in the country.
BYD has cancelled night shifts and reduced output by at least a third of the capacity at four of its factories, sources have told Reuters.
The world’s biggest EV-maker has also suspended some plans to set up new production lines, one of the people said.
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The decisions are a sign that BYD’s robust sales growth over the past couple of years could slow, as it grapples with rising inventory even after offering deep price cuts in China’s cut-throat auto market.
Reuters was not able to identify the exact scale of the production reduction and expansion suspension, nor ascertain how long these measures may last. One of the sources said the moves were aimed at saving costs, while the other said they were imposed after sales failed to meet targets.
BYD, which sold 4.27 million cars last year, mostly in China, has at least seven car factories in the country and it has targeted a near-30% rise in sales to 5.5 million this year.
Shares of Hong Kong-listed BYD gave up earlier gains of as much as 2.6% and fell nearly 1% in late Wednesday afternoon trade after Reuters reported its production cut measures.
Overall, the carmaker’s shares are down more than 16% from their all-time highs of last month. The fall came after BYD announced brutal price discounts that spooked investors and irked its local competitors.
29% lower average output
BYD has risen to become the world’s largest EV maker within the span of a few years by aggressively increasing production and speeding up the rollout of new and more affordable models.
But data from the China Association of Automobile Manufacturers showed growth of BYD’s output had slowed to 13% and 0.2% year-on-year in April and May, respectively, both of which were the slowest pace since February 2024 when factory activities were disrupted by a week-long Lunar New Year holiday.
BYD started ramping up monthly output from the second quarter of the year in 2023 and 2024, the data showed. But the trend has changed this year, with average output in April and May 29% lower than in the fourth quarter of 2024.
Furthermore, a survey conducted by the China Automotive Dealer Association in May found that BYD dealers held an average inventory of 3.2 months. That’s the highest among all brands in China, as the industry-wide inventory level is under 1.4 months.
Last month, a large BYD dealer in the eastern province of Shandong went out of business with at least 20 of its stores found to be deserted or shut, government-owned media reported.
- Reuters, with additional editing by Vishakha Saxena
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