The price war for new energy vehicles continues to heat up, and market competition is further intensifying. On April 21st, Tesla China announced a price reduction of 14000 yuan for all Tesla Model 3, Y, S, and X products in mainland China. Among them, the starting price of the Model 3 has dropped to 231900 yuan, which is only 16000 yuan more expensive than the Xiaomi SU7 standard version. In fact, since April, multiple new energy vehicle brands have announced price reductions, involving numerous new models.
Experts say that the Beijing Auto Show is about to take place, and the release of new products will further enrich the market supply. "The 'trade in' policy in the car market will gradually be implemented, coupled with the release of multiple new car models, which is expected to drive sales growth in the second quarter of the car market."
Tesla's delivery volume falls short of expectations
Tesla's Model 3, Y, S, and X products have all been reduced by 14000 yuan, marking Tesla's second large-scale price reduction in the mainland Chinese market since the beginning of this year.
On April 21st, Tesla China's website showed that the starting price of the Model 3 refresh has dropped to 231900 yuan, and the starting price of the Model 3 long endurance refresh has dropped to 271900 yuan. The reporter noticed that the Model 3 refresh has been reduced by nearly 30000 yuan since the beginning of this year.
At the same time, the starting price of the Model Y rear wheel drive version has dropped to 249900 yuan, the starting price of the Model Y long endurance version has dropped to 290900 yuan, and the starting price of the Model Y high-performance version has dropped to 354900 yuan. Since the beginning of this year, Model Y has undergone multiple price adjustments in the mainland Chinese market. On April 20th, Tesla's US website showed that the Model Y series in the US market was reduced by $2000.
Tesla's large-scale price reduction may be related to lower than expected delivery in the first quarter. In the first quarter, Tesla's delivery volume decreased for the first time in nearly four years, delivering 387000 vehicles, far below the market expectation of 458500 vehicles.
In addition, Tesla recently announced that it will lay off 10% of its workforce globally in order to reduce costs and improve productivity, with a total layoff of 14000 people. Analysts suggest that Tesla's delivery volume may decline again in the second quarter, following a decline in delivery volume in the first quarter of 2024.
In the first quarter of this year, Tesla China delivered 221000 vehicles, contributing nearly six of Tesla's global transaction payments. After the Spring Festival in 2024, the price war in China's new energy vehicle market continues to intensify. Industry insiders say that Tesla's large-scale price reduction this time is to cope with fierce market competition.
Car companies are exchanging price for quantity one after another
Since the launch of the Xiaomi SU7, car companies have been vying for market share by exchanging price for quantity, with frequent adjustments to pricing for new models. The price range for new energy vehicles, ranging from 200000 to 300000 yuan, is fiercely competitive.
According to incomplete statistics from China Securities News, since April, more than 10 new energy vehicle brands have announced price reductions, and some car companies have launched promotional activities such as exchange subsidies, zero interest, and zero down payment.
On April 1st, Wenjie announced a limited time discount of 10000 to 20000 yuan for the new M7. After the discount, the price of the Wenjie New M7 ranges from 229800 yuan to 319800 yuan. Subsequently, NIO, Xiaopeng, Chery and others have launched replacement subsidy activities. Among them, NIO launched a 1 billion yuan subsidy campaign for gasoline vehicle replacement. On April 20th, Xiaopeng Motors announced the launch of a limited time purchase subsidy of 500 million yuan, covering four models including Xiaopeng G9, G6, P7i, and 2024 Xiaopeng P5.
Some new car models have lowered their guide prices. On April 18th, the first model under the Ideal Automobile brand, the Ideal L6, priced below 300000 yuan, was launched with a starting price of 249800 yuan. According to Liu Jie, Vice President of Business at Ideal Automobile, the starting price of the Ideal L6 was originally set at 259800 yuan.
Recently, Xiaopeng Motors announced that its mid size SUV, Xiaopeng G6, has officially launched a new 580 kilometer long endurance Plus version, with a suggested retail price of 199900 yuan and a limited time discount price of 179900 yuan. Compared to the entry-level version of the old model, the price has decreased by 26000 yuan.
The intense price war of new energy vehicles has become a distinctive feature of the automotive market since 2024. Cui Dongshu, Secretary General of the China Association of Automobile Manufacturers, introduced that in the first quarter of 2024, the number of discounted models had exceeded 60% of the total in 2023, mainly due to price reductions for new energy models such as pure electric and plug-in hybrid, with very little price reductions for gasoline vehicles.
The large-scale price reduction of new energy vehicles will further squeeze the market share of fuel vehicles. According to data from the China Association of Automobile Manufacturers, the retail penetration rate of new energy passenger vehicles in the first half of April was 50.39%, surpassing traditional fuel passenger vehicles for the first time.
Further Enriching Market Supply
As the price war in the car market continues to heat up, consumer wait-and-see sentiment intensifies. "The promotion effect of price war on short-term sales is not significant," Cui Dongshu believes.
"Recently, there have been many customers inquiring, but not many have actually placed orders," Liu Yu (pseudonym), a salesperson at Xiaopeng Motors, told reporters on April 21st.
Cui Dongshu told reporters that frequent price reductions in the car market have a significant impact on the profits of related enterprises. From January to February this year, the profit margin of the automotive industry dropped to 4.3%, at a historical low level. The price war has caused significant damage to industry profits. The industry should maintain healthy and reasonable competition, with high-quality products and technological innovation breakthroughs as the competitive point.
Industry insiders say that 2024 is a crucial year for new energy vehicle companies to establish a foothold, and competition will be exceptionally fierce. At the same time, as the price of lithium carbonate, a key raw material for batteries, decreases, the cost of batteries decreases, and the cost of car manufacturing has also decreased.
As the Beijing Auto Show approaches, car companies will gradually release new models, which are expected to drive sales growth in the second quarter. It is understood that new energy vehicle models are still the main force at this year's auto show. This year's auto show will cover 117 global debut models and 41 concept models, with 278 new energy models exhibited, further enriching the market supply.
"In the second quarter, the policy of exchanging old cars for new ones in the car market will gradually be implemented, coupled with the release of multiple new models at the Beijing Auto Show. The expected sales of the car market in the second quarter are good," Chen Shihua, Deputy Secretary General of the China Association of Automobile Manufacturers, told reporters.