The three-month discount war has since seen prices for 50 models across a range of brands dropping by an average of 10 per cent.
A discount of 10,300 yuan represents 7 per cent of BYD’s average selling price for its vehicles, Goldman said.
BYD mainly builds budget models priced from 100,000 yuan to 200,000 yuan.
Tesla rival Li Auto cuts prices as EV discount war spreads to premium market China is the world’s largest EV market where sales account for about 60 per cent of the global total.
He added that price competition among mainland EV makers would spread to overseas markets, particularly in those countries where sales are still rising.
Cui Dongshu, general secretary of the China Passenger Car Association, said in February that most mainland carmakers were likely to continue offering discounts to retain market share.
Some say that the discount war is drawing to a close.
“Competition actually caused expansion of the EV sector and drove its penetration in China,” he told reporters at a media briefing on Thursday.
Lu remained silent on whether BYD would continue to slash prices on its plug-in hybrid and pure electric cars. In February, the company started a price war by slashing prices by 5% to 20% in an effort to draw customers away from gasoline-powered vehicles.
Since the start of the three-month discount war, 50 models from various brands have had their prices drop by an average of 10%.
The automotive industry’s profitability could go negative this year, according to a report released by Goldman Sachs last week, if BYD drops its price per vehicle by an additional 10,300 yuan (US$1,422).
10% of BYD’s average selling price for its cars is represented by a 10,300 yuan discount, according to Goldman. BYD primarily produces affordable models with prices ranging from 100,000 to 200,000 yuan.
As the EV discount war expands to the premium market, Li Auto, a rival of Tesla, lowers prices.
The largest EV market in the world is China, where sales make up roughly 60% of the total worldwide. However, a weak economy and consumers’ reluctance to spend money on expensive goods are causing the industry to slow down.
The majority of mainland EV manufacturers have not yet reached break-even point, and only a small number, like premium brands Li Auto and BYD, are currently profitable.
According to Jacky Chen, the head of international business for Chinese automaker Jetour, “international expansion is becoming a cushion against the falling profit margins at home.”. The price war among mainland EV manufacturers, he continued, would eventually spill over into international markets, especially in those nations where sales are still increasing.
According to Cui Dongshu, general secretary of the China Passenger Car Association, most mainland automakers are probably going to keep giving discounts in order to hold onto market share. Cui made this statement in February.
Budget-conscious consumers prioritize deals when considering car purchases, so a brand’s success in China is largely determined by its prices and promotional campaigns rather than the design and quality of the vehicles, according to a sales manager at the US automaker General Motors’ booth at the auto show, who spoke with the Post.
With a net income of US$15 billion last year—a 19% increase year over year—General Motors reported higher profitability than it does.
There are those who claim that the discount war is coming to an end.
Long-term EV development will be significantly accelerated by this shift, according to Brian Gu, president of Xpeng, a Chinese manufacturer of smart EVs. Short-term pricing stabilization is anticipated.
At a press conference on Thursday, he stated, “The EV sector actually expanded and drove its penetration in China due to competition.”. It quickened the penetration curve and encouraged more people to purchase EVs. “.
