After years of unstoppable growth, BYD is facing cooling sales, high discounts, rising inventories and record debt. What lies behind the shiny facade of Chinese e-mobility and what opportunities does this stagnation open up for European manufacturers? Is BYD in trouble?!
It is BYD In trouble?! China's e-car revolution has shown a steady upward trend - one new model every 48 hours, subsidies of around €230 billion from 2009 to 2023, and BYD taking the throne as the fastest-growing EV manufacturer. But now things are taking a turn for the worst: sales are slipping, discounts are up to €34 %, car inventories would cover 3.2 months of production, and debt has jumped to €42.8 billion (as of July 30, 2025).
The Shocking Reality of China's Auto Industry: Is BYD in Trouble?
China is relentlessly innovation and subsidies became the global engine of e-mobility. But the cooling began in the middle of this year: July production fell by 0.9 %, sales increased by only 0.6 % (compared to last year), while PHEV hybrids recorded a 22.6 % drop in sales and a 24.6 % lower production.
“Discounts up to 34 % are like drinking poison to quench your thirst,” the Chery boss commented with sharp irony.
Is BYD in trouble – a series of weapons: Discounts and stocks
- 34 % discounts to 22 models to accelerate sales.
- Stocks cars are now reaching 3.2 months of production, which means thousands of unsold vehicles.
- Debt balloon: €42.8 billion in loans, which with an annual turnover of €80 billion+ does not represent an immediate bankruptcy risk, but with lower margins it could become fatal.
Supplier Collapse – Is BYD in Trouble?
BYD pays suppliers on average only after 275 days, which is almost twice the average for Chinese manufacturers (182 days) and compares to 90-100 days for Western competitors. Suppliers, forced to draw credit on the basis of freight invoices, look to the government, which has demanded payments in 60 days from June 1, 2025.
International opportunities and threats
Many Chinese manufacturers are looking for exit in exporting and building a sales network in Europe, where they can also reach twice as high margins. But few, like BYD, can afford these costs. Small manufacturers with sales of less than 200,000 vehicles per year are on the verge of extinction.
What does this mean for European (and German) manufacturers?
- Consolidation: mergers or acquisitions of smaller Chinese brands – an opportunity for financially strong European houses to buy up technology and market shares.
- Competitive gap: German manufacturers can now emphasize themselves with proven quality, service network and compliance with standards (EU GDPR, warranties, availability of spare parts).
- Product offensive: Mercedes' new CLA, BMW's new Class and VW's affordable e-models have a chance to make up for lost ground and convince discerning European buyers.
Conclusion: Is BYD in trouble?
China's e-commerce industry has shown the ugly side of a rapidly growing, subsidized market: wild price testing, excessive capacity, artificially inflated statistics and stretched supply periods, which has already led to the first bankruptcy proceedings (e.g. Neta) and poor forecasts for Nio. In this unregulated arena, only the biggest and most flexible will survive – BYD remains the favorite, but even it cannot ignore rising debt and fluctuating demand.
For European, especially German, manufacturers, this is ideal opportunity: acquisitions of innovative but financially vulnerable Chinese brands, upgrading their own technological offering and exploiting customer trust in reliability and service commitments.
