(Yicai Global) May 25 -- Shares in Great Wall Motors and BYD plunged today after the two Chinese auto manufacturers took market observers by surprise and engaged in a heated exchange with each threatening to take legal action against the other after a spat about two of BYD’s electric cars allegedly not meeting vehicle emission standards.

BYD’s Shenzhen-traded shares [SHE:002594] closed down 2.4 percent at CNY255.60 (USD36), while Great Wall Motor’s Shanghai-traded stock [SHA:601633] slumped 6.2 percent to close at CNY24.80 (USD3.50).

In Hong Kong, BYD stock price [HKG:1211] tumbled 5.4 percent to finish the day at HKD234.60 (USD30) and Great Wall Motor’s shares [HKG:2333] sank 7.3 percent to end the day at HKD8.40 (USD1.10).

BYD’s Qin Plus DM-i and Song Plus DM-i models use normal-pressure fuel tanks and therefore purportedly fail to meet the country’s vehicle emissions standards, Great Wall Motors said today, citing the filing it made to the Ministry of Ecology and Environment, State Administration for Market Regulation and the Ministry of Industry and Information Technology on April 11.

Great Wall Motors is paying close attention to the case to see if legal action will be taken, the Beijing-based carmaker said. Environmental protection authorities need to conduct a probe and legal proceedings must be started should the results show any irregularities, it added.

BYD retorted that it reserves the right to carry out legal action of its own and is firmly against any form of unfair competition. All of the Shenzhen-based company’s autos conform with national standards and they have all passed verification by the country’s authorities.

Great Wall Motor bought the two cars and sent them to the China Automotive Technology & Research Center for testing, BYD said. They were not tested according to national-level standards, it said.

Tests should be organized by a third party and testing can only be done on cars that have a mileage of at least 3,000 kilometers. However, the two vehicles that were sent in by Great Wall Motors had only driven between 450 km and 670 km each. Therefore, BYD regards the test results as invalid and Great Wall Motor cannot use them against BYD.

Great Wall Motor might be tired of operating in BYD’s shadow. Great Wall Motor’s sales plummeted 22.4 percent in the first three months from a year earlier to 220,000 units, while BYD’s sales almost doubled, shifting 552,000 units.

Great Wall Motor’s net profit plunged 89.3 percent in the first quarter year on year to CNY174 million (USD24.6 million) and revenue slumped 13.6 percent to CNY29 billion (USD4.1 billion). 

By comparison, BYD logged a more than five-fold surge in net profit over the period to CNY4.1 billion (USD580 million) while revenue soared 79.8 percent to CNY120.2 billion (USD17 billion).

Editor: Kim Taylor