China’s EV price war just kicked up a notch — and investors are worried.
Shares in some of Tesla’s biggest Chinese rivals fell sharply on Monday after a raft of price cuts announced by BYD fuelled fears over the country’s brutally competitive EV industry.
China’s EV market is in the grips of a brutal price war sparked by Tesla last year, as some 100 brands fight for a piece of the world’s largest auto market.
BYD’s price cuts come despite its sales booming this year — and not just in China.
Last week BYD unveiled the Dolphin Surf, the European version of the Seagull.
Investors are concerned as the price war over electric vehicles in China has intensified.
Fears about China’s fiercely competitive EV market were stoked by a series of price cuts announced by BYD, which caused shares of some of Tesla’s largest Chinese competitors to plummet on Monday.
BYD’s stock hit all-time highs last week, but it ended the day 8 points 6 percent lower in Hong Kong.
Associated video.
Automaker Geely’s and pickup manufacturer Great Wall Motors’ stock dropped more than 9% and 5%, respectively, while EV manufacturers Xpeng, Nio, and Li Auto also saw declines.
After BYD announced last week that it would lower the prices of 22 electric and hybrid models through the end of June, the drops came.
A post on BYD’s Weibo channel stated that the already inexpensive Seagull electric hatchback was one of the discounts, dropping from 69,800 yuan ($9,700) to 55,800 yuan ($7,750).
A fierce price war between about 100 brands vying for a share of the largest auto market in the world has gripped China’s EV market, which was ignited by Tesla last year.
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Many Chinese EV startups continue to report quarterly losses of billions of dollars, indicating that the race to the bottom is unsustainable, according to industry figures.
Last year, Thomas Schäfer, the CEO of Volkswagen, described the price war as “ruinous” and said it could not continue indefinitely. In November, the head of Xpeng issued a warning that the majority of Chinese automakers would not be able to survive for the next ten years.
Although BYD’s sales have soared this year, not just in China, the company has decided to lower its prices.
In April, the company surpassed Tesla in sales of electric vehicles in Europe, and it is expected to sell over 5 million cars this year.
The European Seagull, the Dolphin Surf, was introduced by BYD last week. Starting at 23,000 euros ($26,000), roughly $19,000 less than Tesla’s most affordable model, the small hatchback will go on sale in 15 European markets in June.
