1300 Million KRW Electric Car 'Launch' and Massive Price Cuts... Fierce Low-Price Battle in China

BYD is offering large discounts on electric and hybrid vehicles, including a 20% price cut on popular electric car models. As the electric vehicle price war intensifies in China, it is threatening the positions of Toyota, Volkswagen, and others, accelerating market restructuring.

According to data from Chinese automotive portal 16888 analyzed by Bloomberg on the 24th (local time), BYD has reduced prices on more than 100 existing models compared to December last year. Additionally, it relaunched 70 models at lower prices.

BYD Seagull
Photo by Reuters Yonhap News

In particular, low-priced electric vehicle models have become significantly cheaper. The 'Seagull' hatchback is sold at 69,800 yuan (approximately 12.93 million KRW), a 5% discount from the previous price. The best-selling 'Qin Plus' sedan is discounted by 20%, starting at 79,800 yuan (approximately 14.78 million KRW).

Until now, Chinese electric vehicle manufacturers have targeted affluent city buyers in places like Shanghai and Shenzhen. BYD’s comprehensive price cuts are a strategy to encourage customers to choose electric vehicles over gasoline cars while attracting new customers from smaller cities and rural areas who previously could not afford electric vehicles.

Thanks to the significant discounts, BYD vehicle sales have surged. The Qin Plus and Seagull ranked among the top five best-selling sedans and hatchbacks in January and February this year.

Bloomberg analyzed that BYD’s strategy poses a threat to Toyota, Volkswagen, Nissan, and others struggling to expand sales in China.

Bill Russo, CEO of Automobility, a consulting firm headquartered in Shanghai, said, "This is the second phase of the price war," adding, "BYD is leveraging its margin advantage to aggressively attack the market."

Chui Dongsu, Secretary-General of the China Passenger Car Association, stated, "The prices of new energy vehicles are being severely reduced," and "Some internal combustion engine vehicle manufacturers have now reached their limits due to current discounts." According to Bloomberg Intelligence, new energy vehicles accounted for 35.8% of new car sales in February.

Bloomberg expects that if more companies join the electric vehicle price war, those with higher margins will be able to mitigate the impact of price cuts. However, since most companies are not yet profitable from EV production, prolonged price wars are expected to reduce profits. Manufacturers that fall behind in competition may have no choice but to merge or close, accelerating the restructuring of China’s electric vehicle sector.

Yu Chen Ding, Head of China Automotive Research at HSBC, said, "China has too many brands and models," adding, "The automotive industry is expected to consolidate."