China's BYD, which has grown into the world's top electric vehicle corporation, is recently adjusting its production pace, causing mixed reactions in the market. On one side, there are assessments that it has successfully 'surpassed Tesla' as a result of investments aimed at electric vehicle dominance, while on the other side, there are interpretations that it has entered a correction phase amid sluggish domestic demand and inventory burdens.
According to Reuters, BYD has recently suspended night shifts at some of its factories in China and reduced production by up to one-third. It is also reported that plans to expand new production lines have been partially put on hold. This decision came right after BYD sold 4.27 million vehicles last year, rising to the position of the world's top electric vehicle manufacturer, and it is expected to pose challenges to achieving this year's target of 5.5 million vehicle sales.
Although BYD has not officially commented, the prevailing interpretation internally is that the goal is cost reduction and demand adjustment. According to a survey by the China Automobile Dealers Association, BYD dealers hold an average of 3.21 months' worth of inventory, significantly exceeding the industry average of 1.38 months. It is reported that some large dealers have suspended operations or closed their stores.
Price competition for electric vehicles in China is also intensifying. BYD has recently launched a low-cost model priced around $7,800 to expand its market share, but this has raised concerns that the overall profitability of the industry is deteriorating. Dealers are demanding that manufacturers avoid offloading excessive inventory and set production targets based on sales performance.
On the other hand, BYD continues to pursue aggressive strategies in technological competition. In February, it announced an autonomous driving driver assistance system called 'God's Eye' and is rapidly catching up to Tesla in terms of high-speed charging batteries and gigacasting designs. Recently, it has also equipped low-cost vehicles with advanced semi-autonomous features, looking to penetrate the premium electric vehicle market.
The competition for technological supremacy with the United States is also intensifying. Elon Musk is transitioning Tesla's growth drivers to AI, robotaxis, and Optimus humanoid robots. BYD, based on an annual sales level of 5 million units, is accumulating vast driving data. Through this, it is working to enhance its autonomous driving algorithms. Some predict that 'BYD's position to collect data exclusively within China will pose a long-term threat to Tesla.'
However, there are also geopolitical risks. Some of BYD's autonomous driving systems rely on American-made Nvidia chips and foreign partner technologies, so enhanced U.S. export controls could pose challenges. Consequently, BYD is strengthening ties with domestic AI chip company Horizon Robotics and showing movements to independently develop autonomous driving software.
Stella Li, BYD's senior vice president, said in a recent interview with the Financial Times that 'the competition with Tesla in the fields of electric vehicles and autonomous driving technology will rather make BYD a better corporation' and added that 'companies that do not adopt intelligence and autonomous driving will ultimately exit the market.'
BYD is responding to changes in the electric vehicle market by adjusting production and moderating investment speed after rapid growth. It is shifting its focus from a growth-centered strategy to one that emphasizes profitability and technological competitiveness.