The discount war in China’s electric vehicle (EV) space is picking up pace, with leading players BYD and Xpeng slashing the prices of their bestselling models to cushion falling sales. More carmakers are expected to join the fray as they go all out to maintain market share, according to industry officials and analysts.

Shenzhen-based BYD priced the basic edition of its refreshed Yuan Plus SUV at 119,800 yuan (US$16,642), 11.8 per cent less than the current version, the world’s largest EV maker announced on Monday. The move follows a series of price cuts by the carmaker, backed by Warren Buffett’s Berkshire Hathaway, over the past two weeks to improve sales in a slowing market.

Guangzhou-based Xpeng said on Sunday it was extending a 20,000-yuan discount on its bestselling G6 SUV until the end of the month, after deliveries fell to a three-year low in February. The entry-level G6 carries a price tag of 189,900 yuan, compared with 209,900 yuan earlier. Xpeng had initially said the promotion would end on February 29.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

“A bruising price war has escalated since BYD and Xpeng, the two powerful players in the domestic market, resolutely embarked on a low-price strategy to add lustre to their vehicles,” said Eric Han, a ­senior manager at Suolei, an advisory firm in Shanghai. “Their competitors will lose market share if they do not reduce prices of their products.”

BYD has cut the prices of some of its bestselling models in China. Photo: Bloomberg alt=BYD has cut the prices of some of its bestselling models in China. Photo: Bloomberg>

Demand for EVs this year has faltered in China because of a lack of confidence in the economic outlook and continuing woes in the property sector. An end to subsidies of about 12,000 yuan on EV purchases also weighed on sales.

BYD’s sales in February slumped nearly 40 per cent month on month to 122,311 units, the lowest since May 2022. As a result, the carmaker cut prices of models under its Dolphin, Han, Tang, Song and Seal series to stay ahead of the competition.

The company reserved the biggest price cut in the current round of discounts for the revamped Qin Plus DM-i plug-in hybrid, pricing it 20 per cent below the ­previous edition at 79,800 yuan on February 18.

Three carmakers, including a General Motors joint venture, followed suit and priced their bestselling battery-powered cars below the 100,000-yuan threshold, escalating a price war that could accelerate the transition to EVs in the country.

Xpeng’s deliveries in February slumped 44.9 per cent month on month to 4,545 units, the lowest since March 2021.

Tesla, the front runner in China’s premium EV segment, announced on Friday that it would grant a subsidy of 8,000 yuan to buyers who get car insurance from its partners. The subsidy is valid until the end of March.

On Saturday, Hangzhou-based carmaker Leapmotor, in which Fiat owner Stellantis has a 20 per cent stake, priced its new SUV C10 nearly a fifth per cent lower than originally planned.

The pure-electric version of the C10 starts at 128,800 yuan, 17.3 per cent lower than the presale price of 155,800 yuan in January.

Cui Dongshu, general ­secretary of the China Passenger Car Association (CPCA), said last month most carmakers were set to offer discounts and engage in a price war to retain market share this year.

EV makers sold 8.9 million units on the mainland last year, a 37 per cent year-on-year increase, according to the CPCA. But sales growth could slow to 20 per cent this year, according to a forecast by Fitch Ratings in November.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.

Source link

By admin