Will BYD’s price reduction become a turning point for the counterattack of new energy vehicles?

Will BYD's price reduction become a turning point for the counterattack of new energy vehicles

Since the beginning of 2023, Tesla’s continuous price cuts have caused the automotive industry to experience turbulence, and recently its CEO Musk released the “thoughtful and terrifying” news at the “2023 Tesla Investor Day”: Tesla’s next-generation model manufacturing costs can be reduced by as little as 50%. This can be described as “like a tiger with wings” for an enterprise whose gross profit margin of the whole vehicle has reached 30%.

After several months, the aftermath of Tesla’s price cuts has not yet dissipated. Recently, a CEO of a domestic automobile brand lamented at a media conference that “the price reduction of the new energy vehicle market today (car companies) is not a dead end, and there can be a glimmer of life.” Even Li Xiang, chairman of Ideal Auto, who insists that he will not reduce prices, has publicly stated recently that this year’s pressure is relatively great… Cutting prices doesn’t necessarily boost sales, but it can hit others.

  In the face of Tesla’s price cut, “Pinguan” BYD can’t sit still. Recently, there have been public reports that BYD’s dealers in many places will carry out price reduction promotions for some current models. In addition, more than ten car companies, including NIO, Xiaopeng and Feifan, have also reduced prices; On March 6, FAW Toyota bZ3 was officially launched, and the “surprise” was that in addition to BYD’s battery motor, there was a starting price of 169,800 yuan, which was 20,000 yuan lower than the pre-sale price.

  A war without gunsmoke has already begun, and its fierce fighting situation and the wide range of participation can be described as “melee”. If Tesla single-handedly lowered the price of new energy vehicles, then BYD has promoted the comprehensive replacement of fuel vehicles by new energy vehicles. History defines the Sarajevo incident as the trigger for World War I, and whose elegy will the automotive industry play after this price war?

Will BYD's price reduction become a turning point for the counterattack of new energy vehicles
Will BYD’s price reduction become a turning point for the counterattack of new energy vehicles?

the price reduction, I had to follow

  When BYD, which “does not worry about selling”, began to reduce prices, the fierceness of this price war is self-evident.

  Recently, it was reported that although BYD has not officially surrendered, in stores in Beijing and Shanghai, dynasty series products have been discounted in price. The author recently came to a BYD dynasty series sales store in Beijing, according to the staff, BYD Han series models have the largest discount: about 10,000-20,000 yuan. In addition, some popular current models of the dynasty series have thousands of yuan discounts.The above-mentioned staff also said that the pick-up cycle of the dynasty series models has been significantly shorter than that of a few years ago. “If you book now, you can pick up the car in a slow month, unlike the three months or more that you usually had to wait three months or more years ago. ”

As Li Xiang said, when the two leading companies Tesla and BYD have begun to fight price wars, the competitive pressure of the industry can be imagined. The first to bear the pressure is the new force car companies.

  Later, the author came to a Xpeng Motors store in Beijing, and the staff introduced, “The facelift of the Xpeng P7 is about to be launched recently, and the cash promotion is very strong, and the maximum price reduction can reach more than 30,000.” It is reported that at the end of last year, Tesla launched a wave of price cuts of up to 48,000 yuan. Xpeng followed up almost “immediately”, and public information showed that some models of Xpeng P7, Xpeng G3 and Xpeng P5 were adjusted, and the maximum price reduction was as high as 36,000 yuan.

  ”The facelift of Xpeng P7 is about to be launched recently, and the current promotion is very strong, and the maximum price reduction can reach more than 30,000. The staff of the above-mentioned Xpeng Motors store added, “No way, as long as it is a model that overlaps with Tesla’s market, the price will basically be reduced.” ”

While Xpeng was still quietly handling inventory cars, Zerorun had announced a big price cut for the whole series. At the new product launch on March 1, Zerorun launched a large price adjustment measure, from the mini vehicle T03 to the C01, which was just released in August 2022, with a price reduction of nearly 60,000 yuan for the whole series. Zhu Jiangming, chairman of Leapmotor, said at the press conference that Leapmotor pursues a lower price for trams than oil vehicles. And the purpose of Zerorun to fully participate in the price war is also very simple and pure, in the media communication meeting after the press conference, Zhu Jiangming frankly said, “This industry is very miserable, everyone is fighting.” In a growing market, the first thing is sales, or market share, which is our first goal. ”

The AB side of price reductions: promotion and wait-and-see

  ”Because of Tesla’s continuous price reductions, many people who originally wanted to buy new energy vehicles are waiting and seeing. “The 4S shop where Wang Ming (pseudonym) works represents some domestic new energy vehicle brands. He admitted that for the first time this year, he felt that even the Wuling Hongguang MINI EV was not as good as it used to be. “Some consumers even ask as soon as they enter the store, ‘If you sell 60,000-70,000 yuan of cars, will the price be reduced after a while?'” ”

  This “wait-and-see” sentiment is also reflected in the sales of new energy vehicles. According to the data on the risk volume, domestic sales of new energy vehicles in January were 293,600 units, down 6.14% year-on-year and 58.54% month-on-month. Li Xiang posted on social networks, “According to preliminary statistics on the amount of insurance, the volume of passenger cars in the first two months of this year fell by more than 25% year-on-year. Among them, new energy vehicles account for more than 30%.” He judged that the weakness of the demand side will promote a sharp reduction in the price of lithium carbonate, the raw material for power batteries.

There is a saying that “wait the party will never lose, if you lose, it means that you have not waited enough.” “When the price war is roaring, gunfire is thick, car prices are cheaper and cheaper, and so on, the party seems to have ushered in victory.” Wang Ming told Autohome that at the beginning of this year, a customer in the store saw a new energy SUV of about 200,000 yuan and was ready to make a decision. As a result, the family heard that the price of the Tesla Model Y had been reduced, and they paid a deposit to buy the Model Y.

  The strategy of reducing prices and trading volumes has indeed worked, with sales data released by the passenger association showing that Tesla’s wholesale volume exceeded 74,000 vehicles in February, an increase of 12.6% month-on-month. From the perspective of market share, in 2022, BYD and Tesla occupied 20% and 10% of the domestic new energy vehicle market respectively, and this figure became 50% and 18% by February this year… It is not difficult to see that when the two head players “immortals fight”, the living space of other brands is being squeezed. A CEO of a domestic car brand commented on this price war: if you don’t follow, you will die, and there will be a glimmer of life. And the reality is that even with it, there is a possibility of becoming “cannon fodder”.

Will BYD's price reduction become a turning point for the counterattack of new energy vehicles
Will BYD’s price reduction become a turning point for the counterattack of new energy vehicles?

fuel vehicles to join the “dogfight”

  The war of price reduction has not only impacted the new energy vehicle market, but also spread to the fuel vehicle market.

  In early February, the 2023 BYD Qin PLUS DM-i Champion Edition was officially launched, with a starting price of only 99,800 yuan. This is also the first time that the price of BYD’s DM-i model has dropped to less than 100,000 yuan. For a long time, the domestic passenger car market of 100,000-200,000 has been occupied by Japanese and German joint venture car companies. Industry evaluation said that as a hybrid model, Qin PLUS DM-i directly stabbed the knife into the hinterland of fuel vehicles, especially Japanese cars, with its low price. Public information shows that the new Qin PLUS DM-i was bought on the market, with more than 32,000 orders in one week.

Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, commented in an interview that Tesla’s price reduction triggered a large number of new energy vehicle price adjustments, and also led to some fuel vehicle price adjustments in February, so that the terminal transaction price has fallen.

  At the same time, car purchase subsidies from many governments are also fueling the price reduction frenzy in the car market. Recently, the Hubei provincial government, together with Dongfeng Honda, Dongfeng Citroen, Dongfeng Peugeot, Dongfeng Fengshen, Dongfeng Nissan and other brands, launched attractive car purchase subsidies. Public information shows that the maximum subsidy for Dongfeng Citroen C6 series models is as high as 90,000 yuan.

  ”It cannot be ruled out that the fuel vehicle market now has the element of ‘following the trend’ price reduction, and another objective factor is that starting in July this year, the emission standard will switch to the ‘National VI B’ stage.” According to the past law, even if car companies do not reduce prices now, by then, there will be a wave of large promotions to clear inventory. A senior circulation industry insider who did not want to be named said that for weak brands, price reduction is a trend, but in the current price reduction war, if the price is not reduced, it will lose its living space.

For a long time, car companies have been “complaining” that the cost of new energy vehicles is difficult to fall, and the price is difficult to reach the same level as fuel vehicles. Many industry experts also predict that new energy vehicles will not be able to match the price of fuel vehicles until 2025. At the beginning of 2022, due to the increase in the price of upstream raw materials, a number of new energy vehicle companies announced price increases. However, Tesla suddenly announced a price cut at the end of 2022, tearing off the “fig leaf” of the high price of new energy vehicles. Especially at the recent Tesla investor day, the outside world saw that through more advanced manufacturing processes, the production cost of electric vehicles can be lower, and the price can be reduced.

  Because of this, Zhu Jiangming pointed out that only when the price of electric vehicles is equal or even lower than that of oil vehicles, Zerorun has a chance to succeed. BYD also understands this truth. The launch of 99,800 hybrid models is BYD’s ambition to attack the territory of fuel vehicles, and it also kicks off the prelude to the comprehensive replacement of fuel vehicles by new energy vehicles. For those marginalized weak brands, in the face of BYD and Tesla’s price cuts, the original “lower acquisition cost” moat has been lost, and there is no choice but to follow the price reduction.

  In the current price reduction war, the “waiting party” always wins, and fuel vehicles are being accelerated due to “collateral damage”.Miao Wei, deputy director of the Economic Committee of the National Committee of the Chinese People’s Political Consultative Conference, publicly stated in February this year that new energy vehicles are rapidly replacing traditional fuel vehicles, and the two have formed a long-term alternative relationship. “There is no problem of overcapacity in new energy vehicles, and the real excess is the production capacity of fuel vehicles. In the price war triggered by Tesla, BYD inserted the flag into the passenger car market within 100,000 yuan, and the first to bear the brunt may not be the new force car companies that are involving, but the fuel car companies that make money in the wave of “employee internal purchases” and “car purchase subsidies”.

Source: www.autohome.com.cn

You may want to know:

Leave a Reply

Your email address will not be published. Required fields are marked *