BYD has triggered another EV price war in China by slashing the price of several models, sending the stocks of local EV automakers sinking.
China is the largest auto market in the world. It is also the largest and most competitive electric vehicle market since Chinese electric automakers are not allowed to compete in many other markets.
The country’s penetration rate of electric vehicles (BEVs and PHEVs) is nearing 50%.
In comparison, the US is at less than 10%.
How did China get there so fast? The answer is: cheap electric vehicles.
The market has engaged in a couple of price wars that dragged EV prices lower. Things had calmed down over the last few months, but BYD has decided to keep lowering prices.
Over the last day, BYD has announced several new discounts on its vehicles (translated from Chinese):
Bloomberg reported on some of the price drops from BYD:
Revisions by BYD include paring the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction to a model that was already the carmaker’s cheapest and one that had garnered global attention for its sub-$10,000 price tag. The Seal dual-motor hybrid sedan saw the biggest price cut at 34%, or by 53,000 yuan to 102,800 yuan.
BYD’s stock went down by as much as 8% following the news, and other EV automakers, such as Li Auto and Geely, also saw significant drops.
Electrek’s Take
This is going to shake up an already rapidly evolving market. BYD’s gross profit nearly tripled from 2019 to 2024. It looks like it now feels comfortable putting more pressure on competitors who have not all achieved profitability.
It’s similar to what Tesla has done in other markets before.
But speaking of Tesla, the American automaker is going to be amongst the most affected by this renewed price war in the Chinese EV sector. Tesla was already basically not making any money on its electric vehicles sold in China following significant price reductions during the last price war.
This new price war will put even more pressure on Tesla just as competition ramps up with new EVs, like the Xiaomi YU7 we talked about last week.
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