China’s largest new energy vehicle (NEV) maker, BYD, has reduced shifts at two of its plants in response to weakened consumer demand for electric vehicles (EVs), according to a new report. The Xi’an plant, BYD’s largest manufacturing hub, has asked some workers to work only four days a week, with the plant running two eight-hour shifts a day. The Shenzhen plant, which makes the Han sedan, has also reduced shifts from three shifts a day to two. The reason for the reduction in shifts was not given in the internal memo, but one person familiar with the matter said BYD is scaling back production due to weak industry-wide demand in China since the beginning of the year.
BYD has been growing rapidly and taking market share in China, but it has also been slowing production since the beginning of this year when sales across the industry began to slow and China ended its state subsidy program for NEVs. In February, BYD sold 193,655 units, up 27.96 percent from January and up 119.36 percent from a year earlier, according to data it released on March 1.
The reduced shifts come after Tesla’s sharp price cut in China in early January, which led several NEV makers to follow suit. Traditional fuel car makers also began offering significant official discounts, bringing about a widespread price war. BYD began offering discounts on Song Plus and Seal models on March 9 as the price war intensifies.
Analysts believe aggressive discounts have created some demand as other automakers have followed Tesla into what has become a price war for market share, but inventories have been rising across the industry. At the end of February, China’s passenger car inventory stood at 3.41 million units, up 2.4 percent from January, according to data released last week by the China Passenger Car Association (CPCA). The CPCA said China’s fuel vehicle market was slower to stabilize in February, leading to higher inventories at manufacturers and dealers at the end of February.
