ELECTRIC -PRICE WARS- ERUPTING : CHINA PRECIS

 

Electric vehicle price wars erupt in China. Intense competition among many carmakers unsettle a huge market. By one measure, there are around 300 domestic E.V. manufacturers in China.

A cutthroat price war has erupted in the world's largest automobile market. Within a week in March, Volkswagen's Chinese joint venture slashed prices on its ID. 3 electric cars by 18 percent.

Changan Automobile, one of China's state-owned car manufacturers, offered $3,000 cash rebates, free charging credits and other incentives for its electric vehicles.

BYD, the country's biggest E.V. maker, unveiled a second round of markdowns in a month for some of some of its older models.

Amid slumping auto sales, car brands are going to extremes to stay competitive, offering dealership giveaways and deep discounts.

Over 40 carmakers have discounted electric and gas and gas-powered vehicles in China this year. The discounts have amounted to several hundred dollars for cheaper models, and tens of thousands of dollars for higher-end offerings.

''The severity of this cycle of price cuts is something that I've never seen,'' said Tu Le, a managing director at the Beijing consultancy Sino Auto Insights, who has worked in the automotive industry in China and the United States for 25 years.

The price competition has unsettled what was a pillar of strength in the last few years, even as strict pandemic measures shook China's economy and undermined efforts by the ruling Chinese Communist Party to instill confidence.

China's car sales fell 13 percent in the first three months of 2023. Sales of traditional automobiles plunged, while growth in electric vehicles slowed, according to the China Passenger Car Association.

China's E.V. market has grown rapidly since 2020 -doubling in sales last year - propped up partly by government subsidies.

When that program expired in December after 13 years, the competition intensified to attract buyers in an already crowded segment of the market.

At the same time, traditional automakers are scrambling to unload inventory of older cars before tougher national emission standards starting in July make it difficult to sell diesel-and gas-powered vehicles.

The World Students Society thanks authors Claire Fu and Daisuke Wakabayashi.