Not content with unseating Tesla as the world’s top-selling electric vehicle maker, BYD has now set its sights on stealing customers from the likes of Toyota and Volkswagen in one of the most aggressive rounds of discounting seen in China’s bruising price war.
BYD is currently discounting almost every electric and hybrid car model it sells, as part of a marketing campaign labeled “Electricity is cheaper than oil”. According to data verified by Bloomberg News, BYD has cut prices on more than 100 existing model versions compared with December and relaunched a further 70 model trims with lower prices.
Related: BYD Says “Demolish the Old Legends”
Notably, BYD’s most affordable Seagull EV has become even cheaper the price of which has been discounted 5% to 69,800 yuan (or less than US$10,000, which undercuts the average price of an American EV by more than US$50,000). BYD’s top-selling Qin Plus sedan has been discounted even more steeply, by 20% to a starting price of 79,800 yuan.
While Chinese EV manufacturers have generally pitched their models at first-time car buyers in major cities like Shanghai and Shenzhen, BYD’s all-out price cuts are aimed at persuading drivers to ditch their petrol cars and go electric, while also seeking to win customers in smaller cities and rural areas who previously could not afford an EV. The strategy is a massive threat to Toyota, Volkswagen, and Nissan which have all been too slow to transition to EVs and as a result, witnessed their China sales suffer massively in recent times. According to Bill Russo, founder and CEO of Shanghai-based consultancy Automobility:
“This is round two of the price war. BYD is using its margin advantage to attack the market. If I’ve got more chips in my stack on the poker table, then I’m going to try and bully that person off the table.”
The extent of the latest price cuts has shocked even long-time observers used to the nature of China’s hyper-competitive auto market. China Passenger Car Association secretary general Cui Dongshu wrote on his blog last week that discounting has become “ultra-intense” and reached “an astonishing level”.
The hefty discounts are supercharging sales – the Qin Plus and Seagull both cracked the top 5 selling EVs in the first two months of 2024. A year ago, Nissan’s gasoline-fuelled Sylphy was the top seller, followed by VW’s Lavida. Nissan Sylphy and Toyota Corolla were among the cars named by Morgan Stanley Analysts in its report as being under the greatest threat from BYD’s discounts.
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According to a BloombergNEF report, with more companies trimming EV prices, those with higher margins could cushion more aggressive price cuts in the forthcoming period. Since it is believed EVs are much easier to manufacture from a price point of view compared to a complex ICE (internal combustion engine) vehicle, EV makers have the liberty to slash prices much more aggressively than traditional automakers. Bear in mind it was earlier revealed that EV makers such as Tesla’s profit margin on a single unit is almost 8 times higher than what Toyota earns in selling its ICE cars.
However, the latest escalation of the price war could also hasten a shakeout of China’s EV sector, as weaker manufacturers are forced to merge or go out of business. Yuqian Ding, HSBC Qianhai’s head of China car research, while speaking to Bloomberg Television, said:
“China has too many brands, too many models on the market. The industry is due for consolidation.”
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com
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