BYD Chairman and Chief Executive Wang Chuanfu suffered a significant decline in his net worth of $1.5 billion on August 14, 2023.
This misfortune is apparently due to Tesla’s latest price cuts in the Chinese electric vehicle industry. In effect, investors sold their stakes in local electric automakers as they anticipated another price war.
For context, Chairman Wang’s wealth is linked to his 17.6% stake in BYD. Unfortunately, the Chinese EV giant’s shares reportedly declined as much as 6.2% after Tesla’s price reductions.
Nonetheless, Chairman Wang remains 9th in China’s wealthies person rankings with an estimated $18.2 billion worth.
Tesla’s effect on other Chinese rivals
Apart from BYD, Tesla’s aggressive pricing strategy has also affected XPeng and NIO.
The report noted that XPeng’s shares declined by 3%, while NIO saw its stake fall by 3.2%.
These all happened after Tesla announced plans to launch new discounts in its EV offerings in China. According to a Weibo post, the Musk-led company will reduce the Model Y LR variant’s pricing by 14,000 yuan ($1,950) to $41,000. Meanwhile, the Performance variant dropped to $48,000.
Moreover, the American automaker also announced that it would extend the Model 3 RWD’s $1,100 insurance subsidy until the end of September.
Everbright Securities International Securities Strategist Kenny Ng explained that Tesla’s price cuts intensified investors’ worries over high-valuation stocks.
“EV stocks had experienced significant gains in the previous period, resulting in more pronounced downward pressure in this recent correction. Secondly, investors are also concerned about intensified competition within the industry.”
Kenny Ng, Everbright Securities International Securities Strategist
Automotive Foresight Managing Director also asserted that the price cuts are likely part of Tesla’s strategy to revive its declining market share in China. The American automaker faces intense competition from local brands that continue to launch new models.
For instance, Tesla’s China-made EV sales dropped by approximately one-third between July and June. In contrast, BYD continues to advance with the launch of its new Dynasty and Ocean EVs.
See Also:
- Indonesia to launch new set of incentives for electric automakers, organizes a meeting with Tesla and BYD
- BYD to intensify competition with Tesla with its new Denza SUV
- Top 10 bestseller EVs in Q1 2023, Tesla secured the top 2 spots while BYD landed five spots
- Tesla, BYD dominate the global EV industry, while Japanese rivals lag behind
- Tesla EVs get faster charging times with BYD batteries
Tesla’s recent price cuts ultimately violate its oath to end the price war it started in the Chinese EV industry. However, this strategy is crucial for the American automaker to defend its market share against its local competitors.
