NEV makers cut prices amid fierce market competition in China
Published: Oct 26, 2022 08:31 PM
Photo: NEV

Photo: NEV

AITO Auto, a Chinese new-energy vehicle (NEV) maker jointly developed by 5G frontrunner Huawei and automaker Seres, reportedly began promotion activities on Wednesday, one day after Tesla cut prices for its China-made series by up to 37,000 yuan ($5,100). 

AITO Auto has initiated price-off promotions for its M5 and M7 series, with final payments being reduced by 8,000 yuan, domestic news site reported.

As the traditional year-end auto selling peak season approaches, there is speculation about whether a wave of price cuts will emerge amid automakers' increasingly fierce competition in China.

Tesla's latest reductions range from 14,000 to 37,000 yuan, which will take the price of its popular rear-wheel-drive series Model Y below 300,000 yuan. Some analysts argue that the move may mount pressure on other players.

It may lead to a passive change in the pricing strategies of other automakers, including BYD, Geely and Changan Auto, read a report by Soochow Securities.

NEVs priced between 200,000 and 400,000 yuan may be directly affected by Tesla's move, and there may even be a spillover effect on similarly priced traditional fuel vehicles, Soochow said.

Some analysts are more cautious, arguing that there's no solid foundation for further near-term price cuts.

Tesla is relatively profitable, so it can cut prices if orders drop, Feng Shiming, an auto analyst with Shanghai-based Menutor Consulting, told the Global Times on Wednesday.

The latest price cuts show that the Chinese car market is getting very competitive, with both emerging and traditional players growing rapidly. No company has a dominant market position, including Tesla, said Feng.

Cui Dongshu, secretary general of the China Passenger Car Association, agreed that there won't be any massive price cuts in the near future. The middle and low segments of the market will grow strongly during the year-end season, and the market penetration rate of NEVs will surge in 2023, Cui told the Global Times on Wednesday.

From January to September, China's NEV output stood at 4.84 million, surging 113 percent year-on-year, the National Bureau of Statistics revealed. 

In September, retail vehicle sales rose 14.2 percent year-on-year to 421.3 billion yuan, Cui said, so it's obvious that new policies to boost vehicle consumption are working.

Global Times