Tesla Inc. has deepened price cuts for its electric vehicles in China, outstripping reductions by local competitor BYD Co. for its high-end Han sedan, an analysis by JL Warren Capital indicates.
In a decisive move, the U.S. automaker slashed prices of its Model 3 and Model Y cars by 6% and 11%, respectively, compared to last December, noted Junheng Li, CEO of the financial research firm. In contrast, BYD’s Han, a direct rival in the premium EV sector, witnessed a more conservative 5% reduction.
The pricing strategy reflects the intensifying competition in China’s EV market, which remains the largest globally. Amid government incentives for new energy vehicles, including hybrids and battery-powered cars, the sector has seen significant growth. According to Li, the market is heading towards a 40% penetration rate next year, despite an anticipated slowdown in sales growth to 20% from this year’s 35%.
The report also highlighted that while Tesla and Li Auto are on track to meet their annual sales targets, the broader industry faces a daunting challenge to achieve an ambitious 93% growth rate. This scenario suggests a looming escalation in competition, potentially leading to market oversaturation and a focus on faster model turnover.
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