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.