China’s state planner warns the electric vehicle industry of an amplified price war in 2024 due to the overhanging supply that automakers need to deplete, Reuters reports.
NDRC’s price war forecast
The National Development and Reform Commission (NDRC) announced on Monday that it expects new energy vehicles (NEVs) will account for over 110 units of the total 150 new cars that will hit the market this year. In effect, these new models will further intensify the already cutthroat competition in the Chinese market.
The government body further forecasts that NEV demand, including BEVS and PHEVS, will grow by 2.1 million units. However, China’s top three NEV makers (BYD, Aito, and Li Auto) aim to grow delivery figures by 2.3 million units this year.
Therefore, there would be an oversupply of NEVs in the world’s largest auto market.
Driving factors
As per the report, numerous factors will continue to reduce NEV prices in China, including declining battery prices and economies of scale. These projected price cuts will further intensify the price war in China’s electric vehicle industry.
Price cuts will reportedly range from 5% to 10% in 2024 in the southern city of Shenzhen, which currently boasts a high level of electric vehicle uptake.
Chinese electric vehicle giant BYD and its sub-brand Denza have introduced the largest price cuts in the local market, ranging from 7.15% to 9.7% in April compared to the beginning of 2024.
Tesla announces price cuts in China
Tesla has also recently announced price cuts in the Chinese auto market. The Musk-led company reduced the base price of its updated Tesla Model 3 electric sedan by $1,930 (14,000 yuan) to $32,000 (231,900 yuan).
Tesla’s price cuts occurred following the company’s weak electric vehicle delivery performance in Q1 2024, falling for the first time in almost four years. It also comes amid the ongoing price cuts of its Chinese rivals BYD and Li Auto, among others.
These price cuts are crucial for electric automakers in China to stimulate demand and solve the oversupply issue this year.
