They said falling prices could lead to heavy losses, many store closures, and industry-wide restructuring, with only the wealthiest and most well-funded manufacturing companies likely to survive.
“It is an irreversible trend for electric cars to completely replace gasoline cars,” Lu Tian, sales manager of BYD’s Dynasty series, told reporters on Thursday. BYD, the world’s largest EV maker, aims to redefine some segments to offer the best products and best prices to attract Chinese customers, Lu added.
Lu asked whether BYD would further reduce prices for pure electric and plug-in hybrid vehicles, after the company launched a 5-20% price war in February to lure customers away from gasoline-powered cars. was not mentioned.
Since then, a three-month discount battle has seen prices of 50 models from various brands drop by an average of 10%.
Goldman Sachs said in a report last week that if BYD cuts prices by another 10,300 yuan ($1,422) per car, the auto industry’s profitability could be negative this year.
According to Goldman, the 10,300 yuan discount is equivalent to 7% of the average selling price of BYD vehicles. BYD mainly manufactures low-priced models ranging from 100,000 yuan to 200,000 yuan.
Tesla’s rival Li Auto cuts its prices, and the EV discount battle spills over into the premium market.
Tesla’s rival Li Auto cuts its prices, and the EV discount battle spills over into the premium market.
China is the world’s largest EV market, accounting for approximately 60% of global sales. But the industry is facing a downturn due to the economic downturn and consumers’ reluctance to spend on big-ticket items.
At present, only a few mainland EV manufacturers, such as BYD and luxury brand Li Auto, are profitable, and most have not yet reached the break-even point.
“Overseas expansion is a buffer against declining profit margins at home,” said Jackie Chan, head of international operations at Chinese automaker Jettour. He added that price competition among mainland EV manufacturers will spill over into overseas markets, especially countries where sales are still increasing.
Cui Dongxiu, general secretary of the China Passenger Car Association, said in February that many mainland automakers are likely to continue offering discounts to maintain market share.
A sales manager at the US automaker General Motors booth at the auto show told the Post that price and promotional campaigns are more important than a car’s design or quality because budget-conscious consumers prioritize bargains. He said that this is the key to the brand’s success. I’m considering buying a car.
The company’s profitability lags General Motors, whose net income last year rose 19.4% from a year earlier to $15 billion.
Some believe that the price war is nearing an end.
Brian Gu, president of Chinese smart EV maker Xpeng, said prices will be stable in the short term and the changes will effectively promote EV development in the long term.
“In fact, competition has caused the expansion of the EV sector and facilitated its adoption in China,” he told reporters at a press conference on Thursday. “This encouraged more people to buy EVs, accelerating the adoption curve.”
