Late last week we saw something pretty big happen in the EV world… BYD overtook Tesla in Europe for the first time ever. And no matter how many vague AI announcements or Mars-related distractions Elon throws out, that’s a milestone that actually matters. Tesla’s been the top dog for years, dominating the Western EV narrative while BYD quietly gobbled up market share in China. But now, BYD has officially stepped into Tesla’s backyard and planted a flag in the garden gnome. So, it’s a clear signal that Tesla’s dominance is under real threat.

But if there’s been a recurring theme in the markets lately, it’s this: every time a company hits the top of the mountain, it doesn’t take long before they start tumbling down the side. It’s like the market has a built-in humility filter… just when you think you’re untouchable, you get punched in the nose. That’s basically what happened to BYD when it woke up from it’s historic weekend. After hitting a record high just days earlier, the stock dropped as much as 8.25% in a single trading session. The trigger, you ask? A classic case of “post something dramatic online and watch your valuation evaporate.”

BYD did what we’ve seen a thousand times in the U.S…. when Trump logs on to Truth Social and moves markets with all-caps chaos. Except this time it was BYD hopping on Weibo (China’s Twitter, minus the memes and legal threats) to announce sweeping price cuts on 22 of its electric and plug-in hybrid models. The discounts are live through the end of June, and no, they’re not the kind of promo codes you get for joining a newsletter… these are serious markdowns if you look at the numbers.

Take the Seagull hatchback, for instance… a car that was already so cheap it made used mopeds nervous. BYD chopped another 20% off the price, bringing it down to just 55,800 yuan, or about $7,780. That’s dangerously close to impulse-buy territory. But the real jaw-dropper was the Seal dual-motor hybrid sedan, which got a 34% haircut, lowering the price by 53,000 yuan to 102,800 yuan.

Now, price cuts aren’t inherently bad. In fact, Citi analysts estimate that dealership foot traffic surged 30% to 40% over the weekend after the announcement. That means more people are showing up to buy. But for investors, this move sparked concern. The fear is that BYD’s trying to protect its market share in a slowing market by sacrificing profit margins. According to Citi, BYD is expected to make 9,000 yuan per vehicle this quarter, which is actually down from the 10,000 yuan per unit they guided for earlier this year.

And it’s not happening in a vacuum. Other automakers are feeling the heat too. Shares of Geely, Great Wall, Xpeng, and Li Auto all fell between 3–7% on the news. That’s what happens when the biggest player in the game cuts prices… everyone else has to follow, or risk getting put out of business. Several competitors, like Changan and Leapmotor, announced similar price cuts on their own models over the weekend.

To make matters more complicated, China’s own government is watching this closely. Last week, the National Development Commission warned automakers not to trigger a full-blown price war, with some companies reportedly selling vehicles below cost just to move units. That’s not sustainable, and it’s already led to consolidation across the industry over the past two years.

The irony in all of this is that BYD’s price cuts (while they might look desperate at first glance) are actually a calculated display of strength. Only a company with BYD’s scale, vertical integration, and deep cash reserves can afford to cut prices across 22 models and still walk away with a profit.

It’s the same play John D. Rockefeller used over a century ago… selling oil below cost to choke out smaller competitors, knowing they couldn’t afford to keep up. Undercut the market, squeeze the weak, and slowly take control.

(Source: UPC Global)

But that strength is making the entire sector unstable. Investors are worried that we’re entering another round of margin destruction, where every company chases volume at the expense of earnings. But if we know one thing, it’s that BYD has an evil genius plan and I almost guarantee they come out on top at the end of it.

PS: It’s a mess out there.

One day the market’s ripping, the next day it’s Black Monday all over again. Recent earning’s reports have been a total coin flip. One stock beats and explodes 30%… the next misses by a penny and gets sent to the Shadow Realm. And through it all, everyone’s begging for Jerome Powell to finally cave and cut rates.

But underneath all the panic headlines (“Inflation too sticky!” “Recession imminent!” “Tariffs round 4 incoming!”) something wild is happening…

We’re seeing violent price action. Especially in the small-cap space, where low floats and high anxiety are creating the perfect recipe for 100%+ pops before lunchtime. Some of these names are moving 200%+ in under 24 hours… and to our knowledge, NO ONE else is covering them.

Except us.

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Stock.News has positions in Tesla.