That cost advantage means that when rivals cut prices, it is at the expense of fragile margins. When BYD cuts prices, it buys market share and future pricing power. Despite multiple rounds of price cuts in recent years, some as steep as 30 per cent, gross margins have continued to rise since 2021, reflecting its margin buffer. This ability to undercut rivals without sacrificing profitability marks a broader shift in the EV value proposition. Legacy automakers have priced EVs as premium products, citing technology costs and brand value. BYD’s approach challenges that assumption, leaving rivals fewer ways to justify higher prices.
Its latest round of price cuts is forcing its competitors into a corner: either match the discounts and absorb financial strain, or maintain pricing and lose volume. For weaker rivals, consolidation may become unavoidable.
There is little precedent for this level of aggressive pricing in the auto industry. But there are clear parallels with the smartphone wars of the 2010s. After 2013, smartphone hardware became commoditised and consumer expectations shifted from novelty to value. The market moved from innovation-driven growth, with more than 50 companies competing globally, to scale-driven consolidation. Brands such as LG, Sony Ericsson, Nokia, Motorola and BlackBerry, which once defined major product segments, faded quickly as margins collapsed. Only vertically integrated makers with global scale — Apple and Samsung — retained pricing power and market control.