Tesla, Li Auto cut prices as China’s EV price war heats up

Tesla, Li Auto cut prices as China’s EV price war heats up
Tesla, Li Auto cut prices as China’s EV price war heats up

Tesla and Li Auto cut prices further in China amid an intensifying price war that comes as sales of electric vehicles in the world’s largest auto market surpassed that of traditional cars for the first time.

Tesla and Li Auto cut prices further in China amid an intensifying price war that comes as sales of electric vehicles in the world’s largest auto market surpassed that of traditional cars for the first time.

Chinese hybrid specialist Li Auto cut prices by up to 30,000 yuan ($4,144) for all models, including its L7, L8, L9 series and its new, full-electric MEGA model, the company said Monday on its Weibo and WeChat accounts. Tesla cut prices by CNY14,000 for its 3, Y, S and X models, its website showed Sunday, after the EV maker cut prices in the US late last week.

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Chinese hybrid specialist Li Auto cut prices by up to 30,000 yuan ($4,144) for all models, including its L7, L8, L9 series and its new, full-electric MEGA model, the company said Monday on its Weibo and WeChat accounts. Tesla cut prices by CNY14,000 for its 3, Y, S and X models, its website showed Sunday, after the EV maker cut prices in the US late last week.

In China, the starting price of Tesla’s Model 3 is now CNY231,900, while its Model Y, Model S and Model X now start at CNY249,900, CNY684,900 and CNY724,900, respectively.

The price cuts came as new data showed that, for the first time, China sold more electric and hybrid cars than internal-combustion ones. Retail sales of new-energy cars, which include EVs and plug-in hybrids, made up 50.39% of all passenger-vehicle sales in the first two weeks of April, according to data the China Passenger Car Association released over the weekend.

Analysts said the price wars are likely to continue.

CCB International equity analyst Ke Qu forecast “growing and intensified competition in the second quarter” that will likely continue into the third quarter. He noted that more than 40 automakers in China have cut prices or offered discounts this month alone after BYD, the world’s top seller of EVs, reduced prices by 10%-15% for major models in February.

“This is the first time in the history of the auto market that such a large-scale price reduction has occurred,” he said.

Nomura analyst Joel Ying said the power of price setting in China “has completely transferred” to EV makers, adding that other automakers “will have to seek changes to find their position in a market that’s constantly changing.”

Li Auto’s price cuts followed lower-than-expected sales for MEGA, its first fully electric model, in the first quarter. Li Auto launched the new L6 model last week and will attend the Beijing Auto Show starting Thursday. Tesla’s cuts came ahead of earnings this week, with investors concerned about globally slowing sales and the company’s eroding first-mover advantage.

Li Auto’s Hong Kong shares were 9.4% lower in Monday afternoon trading, the worst performer on the Hang Seng Index benchmark. Its ADRs have lost 30% so far this year, while Tesla’s shares have dropped 41%.

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