BYD cuts EV production in China

Chinese car manufacturer BYD has slowed down its production and expansion in recent months by reducing shifts in some factories in China and postponing plans to build new production lines. The Chinese car market recently suffered from overproduction and a discount battle initiated by BYD.

The news agency claims to have learnt from two insiders that BYD has cut back production. Specifically, BYD cancelled night shifts and reduced production in some of its factories by at least a third of capacity, the sources told Reuters.

BYD has experienced enormous growth in recent years and is now the largest car manufacturer in China and the largest electric car manufacturer in the world. However, the reduction in production now indicates that the pace of growth at BYD could slow down, especially as the company itself is struggling with rising inventories following the wave of discounts launched four weeks ago in the highly competitive Chinese automotive market. BYD currently still sells 80 per cent of its vehicles in the domestic market, but the proportion of vehicles sold abroad is set to rise further.

A survey conducted by the China Automotive Dealer Association in May found that BYD dealers had an average inventory level of 3.21 months, the highest among all brands in China, while the industry-wide inventory level was 1.38 months. Faced with rising inventory levels, the China Auto Dealers Chamber of Commerce called on carmakers in early June to stop selling so many cars to dealers and set ‘reasonable’ production targets based on sales figures.

The cuts to BYD’s production, which have not yet been officially announced, are said to have been imposed in at least four factories, reports Reuters. BYD has also suspended some plans to set up new production lines. BYD, which sold 4.27 million cars worldwide last year, has at least seven car factories in the country and has set itself a target of almost 30 per cent growth to 5.5 million units this year.

The exact extent of the production cuts and how long they are to last is still unclear. The reason also remains unclear for the time being. While one of the insiders spoke of cost savings, the other insider said the reason was that the sales targets had not been met.

BYD has ambitious internationalisation plans and is expanding into more and more markets. Production is to be partially localised. For example, electric car production is to start in Szeged, Hungary, at the end of 2025, and BYD also wants to establish its European headquarters, including research and development, in the Hungarian capital, Budapest. BYD already operates six of its own car cargo ships for exports from China.

reuters.com