LEAPMOTOR's stock plummeted 9.64% during Monday's trading session, caught in a broader sell-off of Chinese auto stocks triggered by industry leader BYD's aggressive price cuts. The electric vehicle (EV) sector in China is grappling with intensifying competition and slowing growth, forcing manufacturers to slash prices to stimulate demand.

BYD, China's top-selling car brand, announced sweeping discounts of up to 34% on 22 of its electric and plug-in hybrid models last week. This move has sent shockwaves through the industry, with investors concerned about the impact on profit margins and market share. As a result, several Chinese automakers, including LEAPMOTOR, Geely Automobile, XPeng, and NIO, saw their stock prices tumble between 2.8% to 8.9%.

The price war comes amid challenging market conditions for Chinese EV makers. Despite reaching new annual highs in overall sales, growth in the sector has been decelerating. High inventory levels at dealerships, reaching 3.5 million cars or 57 inventory days in April, have added pressure on automakers to clear stock. This situation, compounded by China's broader economic slowdown, has created a perfect storm for EV manufacturers, forcing them to prioritize sales volume over profitability. As competition intensifies and profit margins shrink, investors are reassessing the near-term prospects of companies like LEAPMOTOR, leading to today's significant stock price decline.