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China’s EV price war expected to continue after discounts fail to ignite car sales
- The previous price drops have not translated into increases in deliveries, Shanghai-based consultant says
- BYD’s net profit for first quarter declines, but Li Auto becomes first Chinese EV maker to sell more than 25,000 cars in a single month
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The ongoing price war in China’s automobiles market is likely to continue as previous rounds of heavy discounts have failed to spur sales, dimming the earnings outlook for most of mainland China’s carmakers.
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Budget-conscious consumers are still reluctant to make purchases, as they expect further price reductions to be offered by carmakers looking to clear their inventories.
The risk of further price competition has not been fully eliminated, Fitch Ratings said in a research note on Tuesday, because key carmakers – particularly electric vehicle (EV) makers such as BYD – are struggling to meet lofty sales goals they set for this year.
“The price war in April disrupted the market order,” said Yale Zhang, managing director at the consultancy Automotive Foresight in Shanghai. “Unfortunately, the price drops did not translate into increases in deliveries. The numbers have hurt carmakers’ confidence in future sales.”
Most Chinese EV makers forecast a 60 per cent year-on-year growth in sales for 2023.
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