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- BYD's share price fell as much as 8% on Monday following disappointing earnings last week.
- Analysts at Jefferies said BYD's "playbook" has been disrupted by China's crackdown on EV price cuts
- BYD reported a steep fall in profits, but overseas revenue is booming as it takes the fight to Tesla abroad.
BYD's "gravy train" might be grinding to a halt.
The Chinese EV giant's share price slumped as much as 8% on Monday, as investors digested disappointing earnings released last week.
On Friday, BYD reported that net profits in the second quarter had fallen 30% from a year earlier, as the Tesla rival grappled with fierce competition in China's congested EV market.
BYD has also found itself in the crosshairs of China's regulators, which have cracked down on practices of heavy discounting and delayed supplier payments that have become standard in China's electric vehicle industry.
In the company's earnings report, BYD said that "short-term profitability" had been affected by "industry malpractices" such as discounting and "excessive marketing."
BYD has itself cut prices multiple times over the past few years, and analysts at Jefferies said regulatory campaigns have hurt the company's "historic playbook" of leveraging its supply chain advantages to aggressively cut prices.
"In short, BYD's 'gravy train' — fueled by scale, cost cuts, and tech leadership — has lost speed. Until it regains momentum, underperformance looks likely," they wrote in a Sunday note.
BYD's disappointing results for the first half of the year were buoyed by a rise in overseas revenues, which soared 50% from the same period last year.
The Shenzhen-based automaker has targeted aggressive global expansion as China's EV market heats up.
BYD has built a fleet of car-carrying cargo ships to meet growing demand in markets like Europe, Brazil, and Mexico, and is pushing ahead with plans to build factories in Brazil, Hungary, and Turkey.
The Chinese automaker outsold Tesla in Europe last month, the second time it has done so this year.