BYD’s Price War: A Deflation Bomb at the Heart of Global Trade
How China’s subsidized industrial firepower is reshaping global market flows and pushing the West to the edge of a new economic response.
May 28, 2025
Overnight, China’s BYD — now the world’s largest EV manufacturer — slashed prices by up to 34% across multiple models.
That single move triggered an immediate response from other Chinese automakers, creating a domino effect of deflationary pressure across the electric vehicle sector.
But this isn’t just about EVs.
It’s about strategy. And it’s about power.
This is how China exports deflation:
The state injects subsidies into priority sectors (EVs, solar, rare earths).
Domestic firms overproduce far beyond internal demand.
China dumps the excess supply onto global markets at cutthroat prices.
Foreign manufacturers — who lack state support — are undercut, displaced, or hollowed out.
💥 The Result?
An artificial price shock — not driven by innovation or market competition — but by geopolitical calculus.
Why This Matters:
BYD overtook Tesla in global EV sales in Q4 2023. In 2024, it’s using its lead not to stabilize prices, but to flood the market and eliminate margin for others.
Europe is already responding. Germany and France are pushing the EU to investigate Chinese EV subsidies, potentially leading to retaliatory tariffs.
The U.S. Inflation Reduction Act (IRA) was designed to counter this exact scenario, localizing supply chains and tying EV tax credits to domestic sourcing.
This isn’t a trade dispute — it’s an industrial confrontation.
Strategic Take:
As Kalypus Research noted, this is why Western powers “dislike trading with China.” It’s not just about competition — it’s about structural imbalance.
China plays a different game:
• State capitalism
• Commanded overcapacity
• Supply-led soft power
This tactic has already devastated solar panel industries in the U.S. and Europe. EVs are next. Semiconductors and batteries are not far behind.
Bigger Picture:
This move should be seen alongside other Chinese plays:
🇨🇳 Strategic stockpiling of lithium and graphite
🛳️ Control of shipping lanes and ports
💰 Bilateral trade deals bypassing the dollar
It’s not just a price cut.
It’s a calibrated strike on Western industrial leverage.
Final Word:
Subsidized deflation may feel like a discount.
But if it comes at the cost of your own manufacturing base, the long-term bill is steep.
🧩 The Gamp Sheet
Tracking the power plays beneath the prices.