SHANGHAI, Oct 11 — After a meteoric five-year rise that saw it surpass Tesla Inc. as the world’s top seller of electric vehicles, Chinese auto giant BYD Co. is now facing a significant reality check as its sales momentum stalls and regulatory pressures mount.

What was expected to be another blockbuster year has instead become the company’s toughest stretch since 2020.

In its home market of China, a regulatory crackdown on the fierce price war that fuelled BYD’s growth has blunted its competitive edge, Bloomberg reported.

In the third quarter of 2025, the company experienced its first year-on-year drop in total sales since 2020, forcing it to scale back its annual sales target from 5.5 million to 4.6 million vehicles.

The slowdown is also hitting the bottom line. In August, BYD reported a 30 per cent slump in net income — its first quarterly profit decline in more than three years — as it struggled to deepen discounts at home while rivals like Geely, Leapmotor, and Xiaomi gained market share.

Adding to its domestic woes, Chinese authorities have also clamped down on supply chain financing, mandating that carmakers settle supplier payments within 60 days. This is a drastic change for BYD, which in 2023 took an average of 275 days to pay its vendors.

While an aggressive global push has helped the automaker find new customers abroad — with UK sales, for example, surging by 880 per cent in September — new challenges are emerging.

Markets in Europe and Mexico are now exploring ways to limit the influx of cheaper Chinese EV imports, while high tariffs effectively shut BYD out of the US market.

These mounting problems have spooked investors. After its market capitalisation peaked at US$175 billion (RM739 billion) in May, BYD’s shares have tumbled.

The stock also took a significant hit in September after news broke that Warren Buffett’s Berkshire Hathaway had sold its entire holding in the company — a stake once worth about US$9 billion.

Despite the headwinds, some market watchers remain optimistic, pointing to BYD’s line-up of new cars in 2026 and potential major tech upgrades as positive catalysts.

Founded in 1995 as a battery manufacturer, BYD entered the auto industry in 2003.

Its ascent was supercharged by government subsidies, a vertically integrated supply chain, aggressive pricing, and a strategic pivot to stylish designs under former Audi veteran Wolfgang Egger, which allowed it to offer vehicles at a fraction of the cost of Western rivals.