CLSA released a report, mentioning that BYD COMPANY (01211.HK)  -13.600 (-3.252%)    Short selling $290.18M; Ratio 13.084%   ignited this year's price war by offering an additional discount of RMB10,000-30,000 (excluding national trade-in subsidies) for its Ocean and Dynasty series models. The suggested retail price for its flagship model, Qin Plus, was axed to RMB63,800 (previously RMB79,800).

Given BYD's pressure to meet annual targets, its price cut announcement did not surprise the market, CLSA observed, which expected that the growth in electric vehicles (EVs) this year is sufficient for scale of economy to absorb price cuts. This suggested that growth is enough to support the annual sales targets of BYD, GEELY AUTO (00175.HK)  -0.340 (-1.883%)    Short selling $81.24M; Ratio 11.530%   , and LEAPMOTOR (09863.HK)  -0.350 (-0.615%)    Short selling $36.23M; Ratio 9.998%   .

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However, non-leading OEMs will hit snags, and the industry's future profitability hinges on the speed of consolidation. Overall, the broker foresaw domestic profitability to trend downward in the coming quarters, while OEMs with strong overseas markets should be able to offset the impact of discounts more effortlessly. From this angle, BYD's overall margin was expected to remain relatively stable.

Regarding the stock market, CLSA believed this is not what investors want to see, but competition is unavoidable and will eventually accelerate industry consolidation. Past price cuts implied that stock prices actually react more evidently to long-term trends. CLSA believed Geely, BYD and Leapmotor are in more favorable positions amid market turmoil. The broker forecast JV brands' ICEVs and models priced in the RMB150,000-250,000 range will require more price cuts.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-05-28 12:25.)