BYD shares have taken a tumble after the the company warned that first-half profit may have fallen by as much as 95%.

Net income for the six months ended June 30 may range from 121.1m yuan to 363.2m yuan, dropping from 2.42bn yuan a year earlier, BYD said in a preliminary earnings statement.

The company warned that the end of tax incentives for small cars in China has reduced market demand this year. BYD’s deliveries dropped 8% last month to 32,515 vehicles as demand slowed.

BYD posted an 84% decrease in first-quarter profit.

“There was a decline in automobile sales volume and revenue as a result of cancellation of preferential tax policy on passenger vehicles with emission below 1.6 litres and intensifying market competition,” BYD said in the statement.

BYD has also reported slower business in its other business sectors.