China EV price war: BYD and Xpeng up the ante as they offer heavy discounts to arrest sales slump

The price war in China’s EV sector is likely to intensify further as carmakers undercut each other amid faltering sales, market observers say

BYD’s sales slumped nearly 40 per cent month on month in February, while Xpeng’s decline widened to almost 45 per cent

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XPeng has extended a 20,00-yuan discount on its bestselling G6 SUV to stem a decline in sales. Photo: Bloomberg

Published: 3:30pm, 4 Mar 2024

The discount war in China’s electric vehicle (EV) space is picking up pace, with leading players BYD and Xpeng slashing the prices of their bestselling models to cushion falling sales. More carmakers are expected to join the fray as they go all out to maintain market share, according to industry officials and analysts.

Shenzhen-based BYD priced the basic edition of its refreshed Yuan Plus SUV at 119,800 yuan (US$16,642), 11.8 per cent less than the current version, the world’s largest EV maker announced on Monday. The move follows a series of price cuts by the carmaker, backed by Warren Buffett’s Berkshire Hathaway, over the past two weeks to improve sales in a slowing market.

Guangzhou-based Xpeng said on Sunday it was extending a 20,000-yuan discount on its bestselling G6 SUV until the end of the month, after deliveries fell to a three-year low in February. The entry-level G6 carries a price tag of 189,900 yuan, compared with 209,900 yuan earlier. Xpeng had initially said the promotion would end on February 29.

“A bruising price war has escalated since BYD and Xpeng, the two powerful players in the domestic market, resolutely embarked on a low-price strategy to add lustre to their vehicles,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “Their competitors will lose market share if they do not reduce prices of their products.”

BYD has cut the prices of some of its bestselling models in China. Photo: Bloomberg

Demand for EVs this year has faltered in China because of a lack of confidence in the economic outlook and continuing woes in the property sector. An end to subsidies of about 12,000 yuan on EV purchases also weighed on sales.

BYD’s sales in February slumped nearly 40 per cent month on month to 122,311 units, the lowest since May 2022. As a result, the carmaker cut prices of models under its Dolphin, Han, Tang, Song and Seal series to stay ahead of the competition.