Shares of Chinese electric vehicle giant BYD tumbled after the company reported its first quarterly profit decline in more than three years, signaling growing pressure in the world’s largest EV market.

BYD’s profit plunged 30% in the latest quarter, with analysts pointing to heavy discounting and an intensifying price war as the main drivers. The company’s gross margin slipped to 18%, down from 18.8% in the first half of 2024.

Beijing’s recent push to ease aggressive price competition in the auto sector has further eroded BYD’s competitive advantage, analysts say. The company, long considered a leader in China’s EV industry, is now grappling with shrinking margins and heightened competition from both domestic and foreign automakers.

The fallout is rippling across China’s auto market, where rivals are also being squeezed by slowing growth, tighter regulations, and consumer caution. For BYD, the profit slump underscores the challenges of balancing market share with profitability in an increasingly crowded field.