Tesla Sparks Price War in China's Auto Market... Intensifies Competition

The price war in the Chinese automobile market is intensifying once again. Led by Tesla, the industry is repeatedly lowering prices, creating a chicken game-like atmosphere.

According to Chinese economic media Jinlongjie on the 21st, more than 12 automobile companies in China, including BYD and Lynk & Co, are currently conducting various promotional activities such as limited-time subsidies. The subsidy amounts range from 3,000 to 10,000 yuan (550,000 to 1,840,000 KRW). Last month, car companies ignited competition in vehicle price reductions and subsidy payments with amounts such as 60,000 yuan from SAIC-Volkswagen, 37,000 yuan from Zeekr, and 10,000 yuan from Chery.

[Image source=AP Yonhap News]

The price war was triggered by the American electric vehicle company Tesla. Tesla has taken bold steps by continuously lowering prices this year. On the 14th, Tesla announced that it would reduce the price of the Model Y Long Range from 313,900 yuan to 299,900 yuan. The Model Y Performance price was also lowered from 363,900 yuan to 349,900 yuan. Furthermore, Tesla announced that if customers purchase a Model 3 rear-wheel-drive vehicle by the 30th of next month, they will receive an 8,000 yuan subsidy through affiliated insurance companies. Tesla had also announced in January that it would reduce the sales prices of the Model 3 and Model Y in China by 6 to 13.5%.

Jinlongjie evaluated, "It is clearly an aggressive marketing strategy to target not only major models but also premium models for price reductions," adding, "It also demonstrates a strong position in market competition." Additionally, it explained, "This will not only stimulate market demand but also increase sales volume and market share."

Elon Musk, Tesla's CEO, mentioned during the Q2 earnings conference call that the worse the economic situation, the more people pay attention to price differences. Tesla revealed that it delivered 889,000 vehicles in China in the first half of this year, which is a 57.42% increase compared to the same period last year. According to the China Passenger Car Association (CPCA), Tesla's sales in China in July were 64,285 units, a 128% surge compared to the same month last year but a 31.4% decrease compared to the previous month. Meanwhile, BYD delivered 262,161 units, surpassing a 40% market share.

This content was produced with the assistance of AI translation services.