China EV price war: BYD and Xpeng up the ante as they offer heavy discounts to arrest sales slump
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.
BYD priced the basic edition of its refreshed Yuan Plus SUV at 119,800 yuan (USD16,642), 11.8% less than the current version, the world's largest EV maker announced on Mon. The move follows a series of price cuts by the carmaker, over the past two weeks to improve sales in a slowing market.
Xpeng said on Sun it was extending a 20,000-yuan discount on its bestselling G6 SUV until the end of the month, after deliveries fell to a 3-year low in Feb. 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 Feb 29.
"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."
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 Feb slumped nearly 40% 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% below the previous edition at 79,800 yuan on Feb 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 Feb slumped 44.9% month on month to 4,545 units, the lowest since Mar 2021.
Tesla, the front runner in China's premium EV segment, announced on Fri 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.
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% year-on-year increase, according to the CPCA. But sales growth could slow to 20% this year, according to a forecast by Fitch Ratings in Nov.
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