Following Tesla’s price cuts in China in the latest sign of softening demand in the largest EV market, Mercedes-Benz followed and has cut the price of some of its electric models, according to Financial Times.
The German automaker said that the starter prices for these models sold in China would be reduced by:
- RMB 50,000/$7,000 (EQE model)
- RMB 204,600/$28,720 (EQS model)
- RMB 198,600/$27,878 (AMG EQS 53 model)
“We aim to flexibly adjust operational strategies in response to shifting market demands,” said the company.
New energy vehicle sales jumped 81.7% YoY
Even though China’s sales of new energy vehicles (pure electric, plug-in hybrid, and hydrogen-powered models) jumped 81.7% year-on-year to 714,000 units in October, it’s the slowest growth since April, as per the data from the China Association of Automobile Manufacturers.
Brands following after Tesla price cuts
Tesla cut prices for its Model 3/ Y in China last month. Days after the Texas-based automaker’s move, Ford Motor’s EV arm, and Aito, a Huawei-backed EV brand, followed.
Notably, western automakers are racing to produce EVs with extended driving ranges, letting drivers travel between cities without charging. With China’s size, its drivers will likely drive in urban settings and choose luxury features like spacious passenger seating.
Mercedes EQS SUV version
The Mercedes EQS model, which has a long-range, has a more compressed back in contrast to other models by the automaker. The company is preparing to launch an SUV version.
“Local rivals are also becoming increasingly competitive in the space of electric and digital transformation,” Hubertus Troska, responsible for China activities at Mercedes, told the China International Import Expo, state media reported.
The country has rapidly grown to become the world’s largest EV market, and homegrown brands like BYD are looking to take on the European market.
Analysts warned of ‘price war’
Moreover, analysts have warned of a ‘price war’ in the country’s crowded EV sector.
“This price-cut strategy would generate overall negative sentiment,” noted Citigroup analyst Jeff Chung, citing stalling EV sales growth due to economic headwinds and zero-Covid controls in China.
Chung added that Tesla’s move would put pressure on other high-end electric automakers, including BYD, Volkswagen, and XPeng.
