The electric vehicle price war in China is heating up as industry leaders such as Tesla launch new models and others aggressively cut prices in a bid to stem slowing growth in the world’s biggest auto market.
Tesla on Friday unveiled its highly anticipated revamped Model 3. Minutes later, Elon Musk’s company slashed prices across its range of Model S and X cars in China and the US.
Guangzhou-based Xpeng was quick to follow. Seen as one of the most direct competitors to Tesla, Xpeng said it will now offer discounts on its flagship P7i sedan of up to 24,000 yuan ($3,300) for the month of September.
Other car makers have piled in, with Zhejiang Leapmotor Technologies discounting the price of its T03 compact hatchback by up to 10,000 yuan this month, according to a Weibo post.
There were signs that China’s intense EV price war, which has eaten into car makers’ margins, was starting to abate in June and July, but Friday’s action has cast doubt over that.
Car makers are struggling to defend their share in a shrinking market as China’s economy slumps.
Overall car sales for July fell 2.3 per cent compared with last year, while EVs and plug-in hybrids grew at 32 per cent — still robust, but a far cry from the 117 per cent surge seen the same time in 2022.
EV companies are also adding to their war chests. While this will help some survive for longer, it could also draw out the costly fight.
“If you’re not the latest and greatest, you are left with price discounts as your only weapon,” said Bill Russo, a former Chrysler executive and now chief executive of Shanghai-based consultancy Automobility, in reference to Tesla’s latest moves.
Geely Automobile Holding’s Zeekr EV brand has filed paperwork to go public in the US, while Avatr, a joint venture between Chongqing Changan Automobile and battery-making company Contemporary Amperex Technology, said on Thursday that it raised three billion yuan in Series B funding.
Avatr is known for its driver-assistance technology.
New models are also being launched in China at an unrelenting pace.
Zeekr is on Friday set to launch the 001 FR luxury sports EV, which aims to draw customers away from Tesla’s Model S Plaid, the high-performance version of which has had its price cut by 19.4 per cent.
Zeekr is also discounting its flagship 001 sedan by up to 37,000 yuan until the end of the year, taking the entry-level version down to 269,000 yuan.
That makes it more closely aligned with Tesla’s similarly sized Model Y, which is selling at 263,900 yuan.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
