Yang Yunfei

1017800664@qq.com

CHINA, the world’s largest auto market, is seeing a new round of brutal price war as automakers race to lower prices to stay competitive amid an increasingly fierce battle between makers of electric vehicles and conventional fossil fuel cars for a greater share of the low-end market.

BYD Co., which surpassed Tesla Inc. as the world’s biggest seller of electric vehicles (EVs) last year, fired the first salvo Monday by launching new versions of its two plug-in hybrid models, Qin Plus DM-i and Destroyer 05, with starting prices of 79,800 yuan (US$11,090) for both, down 20%, or 20,000 yuan, from the previous versions.

Known as the Glory edition, BYD’s new models compete with best-selling gasoline sedans such as Nissan’s Sylphy, Volkswagen’s Lavida and Toyota’s Corolla in the domestic market.

BYD’s new models are 15% cheaper than the entry-level Lavida and nearly 40% less than the basic Corolla, turning out to be very attractive for those budget-conscious drivers who are looking to buy low-priced EVs.

“We have gotten many inquiries from potential buyers [about BYD’s new models] these days,” a sales agent at a BYD dealership in Futian said yesterday, adding that they also get some orders.

BYD can sell plug-in models at prices lower than the same-grade petrol cars thanks to the scale effect and the advantages of [BYD’s] total control of its industrial chain, Li Yunfei, head of BYD’s branding and public relations department, wrote on microblogging site Weibo.

BYD will “kick off a war against traditional fuel cars” and nobody will want to buy them anymore, Li noted.

BYD can produce more affordable EVs than its rivals partly because the Shenzhen-based firm makes its own batteries, which typically make up around 40% of an EV’s cost. The firm is benefiting from plunging lithium prices over the past year, when the ultra-light metal used in EV batteries has plunged more than 80% from a late-2022 record.

BYD’s move has caused quite a stir in the domestic auto market and other carmakers quickly join the fray.

SAIC-GM-Wuling, a joint venture between Chinese carmakers SAIC Motors and Wuling Motors and U.S. car giant General Motors, Changan Automobile and Hozon New Energy Automobile have this week cut prices of their budget EV models to below the psychologically important 100,000 yuan level.

On Monday, SAIC-GM-Wuling lowered the price of its Xingguang hybrid sedan by 6,000 yuan to 99,800 yuan, Changan slashed the starting prices of its Q05 and A05 models under the Qiyuan brand to 73,900 yuan, while Hozon discounted its Neta X SUV by 22,000 yuan to 99,800 yuan. South Korea’s Hyundai Motor also joined the battle by quickly cutting the price on a fuel-powered model to 75,800 yuan.

The 100,000 yuan price tag is considered a critical threshold in China’s auto market as statistics from the China Passenger Car Association show that car models usually priced at between 50,000 yuan and 150,000 yuan are mostly dominated by petrol vehicles from joint ventures between Chinese and foreign automakers.

By pricing their cars under 100,000 yuan, EV makers are adopting pricing strategies to slowly but steadily squeeze legacy carmakers out of the low-end market, analysts said.