Photo: BGNES/EPA
Tesla Inc. A price war has begun in China that is about to change the face of the world’s biggest auto market, as deep discounts threaten to put some automakers out of business.
In October, Elon Musk’s electric car maker – a major player in hyper-competitive China – cut prices on models made at its huge factory on the outskirts of Shanghai. Matters escalated in January with another cut that saw Tesla’s locally made cars up to 14 percent cheaper than last year, and in some cases nearly 50 percent cheaper than in the U.S. and Europe.
These actions left their competitors with little option but to follow suit. Among them were domestic EV manufacturers such as Xpeng Inc. and Nio Inc., as well as leading international brands such as Volkswagen AG and Mercedes-Benz Group AG, which offered discounts of up to 70,000 yuan ($10,000). The starting price of Ford Motor Co.’s Mach-E electric SUV. is 209,900 yuan, which is about a third cheaper than in the US.
“Tesla has created chaos for the rest of the market,” said Jochen Siebert, managing director of JSC Automotive, a consultancy with offices in Shanghai and Stuttgart.
At least 30 other automakers have cut prices, according to estimates by Bloomberg News and local media.
The China Association of Automobile Manufacturers called for an end to the price war on Wednesday, saying it was not a long-term solution to the problem of slowing sales and stockpiling. The industry must “return to normal operation” to ensure its healthy development, the authority said.
Chinese state media also weighed in, commenting last week that it was wrong for regional governments to offer subsidies for locally made cars. In one example, Hubei province and state-backed automaker Dongfeng Motor Group Co. have reduced the prices of Citroen C6 models by as much as 90,000 yuan – or almost 40%.
The cuts come amid a difficult period for China’s auto sector. Consumer spending has been severely depressed by the country’s long-standing Covid restrictions, and sales have also been hit by the removal of government subsidies for the purchase of electric vehicles late last year. Supply chain disruptions have also hurt the automotive industry globally.
Even with these challenges and a slower economy, retail sales of new energy vehicles – including fully electric and plug-in hybrid vehicles – nearly doubled to 5.67 million in China last year. The domestic giant BYD Co. about 30% of them fall. In November, Tesla delivered a record of over 100,000 electric cars per month from Shanghai.
The whole analysis – of Bloomberg TV Bulgaria website
