BEIJING, March 6 (Reuters) – Chinese electric vehicle giant BYD on Wednesday added fuel to China’s brutal price war by cutting the price of its cheapest car, the Seagull, by 5%.
From now on, the Seagull compact car will be priced at RMB 69,800 ($9,700).
BYD has become a cutthroat seller in the price war that Tesla launched last year in the world’s largest auto market. That aggressive stance has helped BYD unseat its U.S. rival as the world’s largest seller of electric vehicles, even though most of BYD’s vehicles are sold in China.
The company has undertaken a series of price cuts this year, including a nearly 12% cut in the price of the Yuan Plus crossover, its best-selling vehicle known in overseas markets as the Atto 3. The price cuts were deeper than those of competitors and on more models. .
Amid uneven growth in the world’s second-largest economy, sales (including exports) of new energy vehicles such as electric vehicles and plug-in hybrids are expected to rise 13% this year to 11.5 million units. This figure is much lower than the 38% growth expected in 2023.
Other automakers that have implemented new price cuts this year include Tesla, Geely Auto, GAC Aion, Leapmotor and Xpeng.
BYD is likely to offer more discounts before 2024, which will put pressure on the brand’s gross margins but could be partially offset by cost cuts from suppliers, according to Shi Ji, a Hong Kong-based analyst at China Merchants Bank International.
Today, the Warren Buffett-backed automaker’s gross margins are holding up fairly well. Margins were 22% in the third quarter, down from 18.7% in the second, according to Reuters calculations.
BYD has also aggressively expanded its presence overseas. For example, the company is leading a Chinese initiative to produce electric vehicles in Australia and has begun building a manufacturing complex in Brazil.
($1 = 7.1978 yuan)
(Reporting by Qiaoyi Li, Zhang Yan and Brenda Guo; Editing in Spanish by Ricardo Figueroa)
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