Insider sources of Reuters reported that Chinese EV giant BYD has slowed its production and business expansion in recent months by reducing shifts at some factories in China and delaying plans to add new production lines.
The decision signals that BYD’s strong sales growth over the past two years—which helped it surpass Tesla to become the world’s largest EV manufacturer—may be starting to slow down, as the company faces rising inventory levels despite aggressive price cuts in the competitive Chinese auto market.
Sources revealed that BYD had canceled night shifts and cut production by at least one-third of capacity at some factories. These previously unreported measures were implemented at at least four production sites, and BYD has also suspended plans to establish new production lines at some locations.
BYD sold 4.27 million vehicles last year, mostly within China, and operates at least seven car manufacturing plants in the country. It has set a sales target of 5.5 million units for this year—an increase of nearly 30%.
Reuters sources were unable to confirm the exact scale of the production and expansion slowdown or how long the measures would last. One source said the move was aimed at cost-cutting, while another stated it was triggered by sales failing to meet targets.
BYD’s Hong Kong-listed shares, which had earlier climbed by as much as 2.6%, fell nearly 1% on Wednesday afternoon following the Reuters report on the production cuts.
Data from the China Association of Automobile Manufacturers (CAAM) showed that BYD’s production growth slowed to 13% and 0.2% year-on-year in April and May respectively—its slowest pace since February 2024, when factory operations were disrupted by the Lunar New Year holiday.
The data also showed that BYD had ramped up monthly production from Q2 of both 2023 and 2024, but this trend has reversed in 2025, with April and May’s average output down 29% compared to Q4 of 2024.
BYD ascended to the top of the global EV market in just a few years through aggressive production increases and the constant launch of more affordable models. Its latest price campaign slashed the starting price of its cheapest model to just 55,800 yuan (approx. $7,800), sparking a broader sell-off in Chinese auto stocks and prompting rival manufacturers to follow suit with their own price cuts.
A May survey by the China Automobile Dealers Association (CADA) found that BYD dealers held an average inventory of 3.21 months—the highest among all car brands in China—while the industry-wide average stood at 1.38 months. A major BYD dealership in the eastern province of Shandong has reportedly shut down, with at least 20 of its showrooms found deserted or closed, according to state-owned media.
As inventory levels rise, the China Auto Dealers Chamber of Commerce has urged automakers to stop oversupplying dealerships and to set “reasonable” production targets based on actual sales. The group warned that the ongoing price war is straining cash flow and squeezing profitability.
On Monday, Chinese dealer associations urged automakers to issue cashback incentives within 30 days to ease financial pressures.
Intensified price competition has prompted Chinese regulators to increase scrutiny of the automotive sector in recent months. The years-long price war has placed pressure on suppliers, manufacturers, and dealerships across the industry.
As a result, Chinese automakers are increasingly turning to overseas markets to support sales and compensate for weakening momentum at home. In the first five months of this year, BYD sold 1.76 million vehicles, with around 20% of those exported.
Source: Reuters
