This is BYD's first price cut this year, meaning that keeping market share stable in 2023 may be more important than maintaining profit margins.
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As China's largest maker of new energy vehicles (NEVs), BYD's (OTCMKTS: BYDDY) price cut underscores the pressure the industry is facing.
Models in BYD's Dynasty lineup have been reduced in prices, with delivery wait times also shortened to varying degrees from last year, local media outlet Jiemian reported today.
The NEV maker's models consist of the Dynasty series, which includes the Han, Tang, Qin, Song and Yuan families, and the Ocean series, which includes the Seal, Dolphin and Frigate and several others.
Jiemian visited a number of BYD showrooms in Beijing and Shanghai on February 24, and salespeople at one showroom in Beijing said they had just received official notice of the price cuts, with most models offered at a discount.
Older models have discounts of 10,000 yuan ($1,440) or more, and some popular models have thousands of RMB off, according to the report.
For example, the price of the 2021 Han EV was cut by RMB 20,000 and the 2021 Qin EV was reduced by RMB 15,000, while discounts on newer models generally ranged from RMB 6,000 to RMB 8,000, the report said.
But that price cuts are limited to Beijing and are expected to end in March. Shanghai and Shenzhen saw price cuts of varying degrees, but up to around 10,000 yuan, according to the report.
The models of BYD's Ocean series have not been reduced in prices. The sales staff of BYD Ocean network showrooms in Beijing, Shanghai and Shenzhen interviewed said that they have not received any price adjustment notices recently, the report said.
Most of BYD's hot-selling models currently have existing vehicles in stock, and the delivery cycle for consumers' customized models has been shortened from about six months last year to two to three months, according to the report.
This is BYD's first major price cut this year, meaning that for the NEV maker, keeping market share stable in 2023 may be a more important task than maintaining profit margins, the report said.
BYD's NEV sales fell 35.65 percent to 151,341 units in January from December, ending a 10-month streak of growth, as the Chinese New Year holiday took its toll on sales.
China's wholesale sales of new energy passenger vehicles stood at 389,000 units in January, down 7.3 percent year on year and down 48.2 percent from December, according to data released earlier this month by the China Passenger Car Association (CPCA).
This means that BYD's share of China's NEV market in January was about 40 percent.
On November 23 last year, BYD announced that starting January 1, 2023, it would increase the official guide prices of models in the Dynasty and Ocean series, as well as those in the Denza brand, by 2,000 yuan to 6,000 yuan.
BYD said at the time that this was because China's NEV purchase subsidies would expire on December 31, and the prices of key raw materials, including batteries, had risen sharply.
It's worth noting that a month before BYD announced the plan, Tesla (NASDAQ: TSLA) sharply lowered the prices of its entire Model 3 and Model Y models in China on October 24.
On January 6, Tesla again lowered the prices for the Model 3 and Model Y in China to boost demand in the world's largest electric vehicle market.
Growth in China's electric vehicle (EV) market is expected to plummet to 30 percent or less this year from triple digits previously, meaning car companies will be competing fiercely for share, Jiemian said today, citing several industry sources.
Pressure from Tesla's price cuts and declining sales in the short term could be the main reason for BYD's price cuts, the report said.
Tesla's models, which start in the RMB 200,000 to 300,000 range after two price cuts in the past months, will compete with BYD's main-selling Han as well as Tang family models, the report said.
After the Chinese New Year holiday, the number of visitors entering BYD showrooms has decreased and there is inventory pressure on older models, Jiemian quoted a salesperson at a BYD showroom in Shanghai as saying.
In addition, some dealers are using their own funds to give extra benefits to customers in a bid to clear long-stock vehicles as soon as possible to get more money back and prepare for the slow car-buying season in March-April.
(1 $= 6.9563 RMB)
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