BYD cuts production as sales slow and inventory piles up

China’s leading electric vehicle manufacturer, BYD, has reduced production rates and paused capacity expansion at several of its factories in China, according to Reuters.

Sources reported that the company has canceled night shifts and cut output by at least a third at four plants, while also halting the launch of new production lines.

This decision comes amid accumulating warehouse stocks, despite aggressive price discounts, signaling a potential slowdown in the rapid growth that allowed BYD to surpass Tesla in sales volume.

While BYD has not commented on the situation, analysts suggest this may be a response to unmet sales targets and an effort to optimize costs. The company aimed to sell 5.5 million vehicles in 2025, following a record 4.27 million the previous year, primarily in the domestic market. However, production growth slowed sharply to 13% in April and 0.2% in May 2025 – the lowest figures since February 2024.

Concurrently, China is seeing a rise in the gray export of new vehicles disguised as used, known as “zero-mileage” cars. These vehicles are registered in China immediately after production, assigned a license plate, and then promptly documented as used for export to destinations such as Russia, Central Asia, or the Middle East. Despite never being driven, they are classified as second-hand in paperwork, allowing manufacturers to record sales and offload unsold inventory.

According to Reuters, at least 20 provinces are issuing special licenses, expediting tax rebates, and developing export infrastructure to encourage the shipment of these vehicles.