Falling sales of electric vehicles are forcing Chinese car companies to resort to a frequently used tactic: price wars. Electric vehicle shipments in China slowed earlier this year compared with the final quarter of last year, with declines affecting brands such as Nio, Li Auto, Xpeng and BYD.
EV giant BYD, a relentless discounter, on Wednesday slashed the price of its cheapest car, the Seagull, by 5%. Therefore launch BYD Yuan Plus crossover, known in overseas markets as Atto 3, with a starting price of 119,800 yuan (US$16,643), 12% lower than its predecessor.
Warren Buffett-backed BYD isn’t the only company resorting to discounting. Shpeng said on Sunday that it will extend the 20,000 yuan ($2,779) discount on its best-selling G6 SUV model until the end of March. The Geely Zeekr 001 is also about 10% cheaper at its starting price. price worth 269,000 yuan (37,371 US dollars).
Tesla, which sparked bitter price wars in China last year, also introduced incentives for March. The American automaker is offering customers an insurance subsidy if they buy the company’s Model 3 and Model Y vehicles.
Even hybrid cars get discounts. BYD’s latest plug-in hybrid model, the Qin Plus DM-I, is priced 20% lower than the previous version at RMB 79,800 ($11,086).
SAIC-GM-Wuling, a joint venture involving General Motors and two Chinese automakers, price The Xingguan hybrid car was priced at 99,800 yuan ($13,865) in February, below the 100,000 yuan threshold.
China has the world’s largest electric vehicle market; This sector is highly competitive due to the number of brands that operate in the country. Some electric vehicle makers have resorted to price wars to boost sales. BYD’s aggressive discounting may have helped the company unseat Tesla as the world’s largest seller of battery electric vehicles.
However, according to the China Passenger Car Association, the discounts may have an unintended impact on consumers who are now delaying purchases in hopes of getting an additional discount.
In addition, there is a possibility that after years of strong growth and investment, the Chinese electric vehicle market may now produce more vehicles than could be sold domestically. Chinese automakers are now looking overseas for growth opportunities, but the influx of cheap Chinese electric vehicles could prompt a response in markets such as the United States and Europe. China also warns of excess capacity in the domestic electric vehicle sector.
Bad news for Tesla
Tesla shares fell 2.3% in Wednesday trading after Morgan Stanley cut its price target for the electric vehicle maker, citing weaker demand for electric vehicles in key markets such as China.
“The Chinese electric vehicle market is oversaturated,” warned analyst Adam Jonas. Reuters. The analyst added that Tesla’s product line “may be the oldest of any major OEM (original equipment manufacturer), with nearly its entire lineup being released pre-COVID.”
Tesla shares are down 12.7% this week. On Monday, the China Passenger Car Association said Tesla sales in China fell 19% year-on-year in February. Tesla sold 60,365 Chinese-made vehicles last month, the lowest the company has sold in China since December 2022. The news sent shares plunging, knocking CEO Elon Musk out of his position as the world’s richest person, according to Bloomberg estimates.
Musk is in business now third placebehind LVMH CEO Bernard Arnault and Amazon founder Jeff Bezos.