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Shares of China EV Firms Slump as Tesla Sparks Fresh Price War

Chinese electric vehicle-makers have rushed to take on Tesla, despite increasing competition, slowing demand and looming oversupply

Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China
Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China. Photo: Reuters


Shares of Chinese electric vehicle (EV) makers slumped on Monday after US rival Tesla sparked off another price war in the world’s biggest car market.

Tesla cut the starting price of its revamped Model 3 in China by 14,000 yuan ($1,930) to 231,900 yuan ($32,000), its official website showed on Sunday.

That prompted Chinese automaker Li Auto to announce on Monday that it was cutting prices by around 5% on four of its five models. It added that it would refund owners who had bought those models earlier this year.


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While Li Auto’s move was fuelled by a push to stay competitive in China’s increasingly tough EV market, the fresh round of price cuts spooked investors.

Hong Kong-listed shares of major Chinese EV firms were in the red on Monday, led by Li Auto, which slumped more than 8% by close of trade.

Meanwhile, shares of Great Wall Motor slumped more than 6% while Leapmotor fell over 5%.

Bigger EV-makers saw relatively smaller drops, with Nio and Xpeng falling close to 2%.

China’s biggest EV-maker BYD — which briefly overtook Tesla as the world’s biggest EV-seller last year — was flat, closing just 0.20% lower.

In US pre-market trade, Tesla shares were also trading more than 3% lower as of 1206 GMT.

Investors are growing increasingly wary of the EV price war in China, with concerns about automakers’ increasingly thinning margins.

The ongoing price war, that started early last year with cuts by Tesla, has drawn in dozens of automakers including BYD, Geely Auto, GAC Aion, Leapmotor and Xpeng.

Chinese automakers have rushed to take on Tesla despite increasing competition and slowing demand already weighing on their market share.

Eugene Hsiao, head of China equity strategy at Macquarie Group, noted over the weekend that all of China’s biggest EV makers have one goal in mind — “taking the crown from Tesla,” according to a CNBC report.


Looming oversupply

The less than ideal market conditions prompted China’s state planner on Monday to warn of oversupply in the country’s EV market, adding that the price war will only intensify.

The National Development and Reform Commission (NDRC) said it expected the release of more than 110 new energy vehicle (NEV) models among a total of 150 new cars launched this year. NEVs include electric cars and plug-in hybrids.

The NDRC also estimated the market demand for new energy vehicles to grow 2.1 million units this year, but BYD, Seres Group’s Aito and Li Auto — the three top NEV brands — had planned to increase deliveries by 2.3 million units for 2024.

Falling battery costs and economies of scale will be the other two main reasons for price cuts in NEVs, which will range from 5% to 10% this year in the southern city of Shenzhen, a metropolis with high EV adoption, NDRC said.

BYD and Denza cars have been leading the price cuts with reductions of 7.15% to 9.7% to the prices of five models in April compared with those at the beginning of the year, according to NDRC.



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  • Vishakha Saxena, with Reuters


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Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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