BYD’s Fall Should Act As A Warning

With Chinese EV automaker BYD taking some serious financial hits recently, it should act as a warning to the auto industry. After all, just a few short weeks ago, many in the industry were declaring BYD not only wouldn’t fall but was heralding the future of the automobile. While we would love to believe the situation will act as a great object lesson to those who make big decisions, we sadly believe it won’t.

This is how Chinese automakers game the system.

In case you haven’t heard, BYD saw its net profit fall 30 percent for the second quarter, shocking many. After all, the automaker’s profits doubled in the first quarter. Investors have acted swiftly, with stock shares losing value quickly.

Many media outlets and industry analysts practically worshipped the Chinese automaker and its electric vehicle lineup. But just like so many times before, what was hot yesterday is now dog water.

We’ve seen over and over how so many in the auto industry seem to have the memory of goldfish. They fail to learn lessons from past mistakes, then repeat them over and over, acting surprised every time the same or a similar outcome results.

If we didn’t know better, we’d say there’s so serious groupthink in the auto industry. The other alternative is a lot of people sitting in lofty positions they have no business occupying. Maybe both are true?

Far too many other automakers were trying to realign their strategies to emulate BYD, which we always thought was foolhardy. For starters, BYD operates in a market that’s highly manipulated by the Chinese Communist Party, so for companies that work in freer markets the same thing won’t net the same results.

Sure enough, analysts are blaming meddling from the CCP, which wants to stop a domestic price war among automakers, as the reason for BYD’s financial woes. But the communists could also step in and prop it up, as they’re wont to do. Maybe that was the whole point of the meddling to begin with?

Image via BYD

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