On January 17, Chinese automaker XPeng announced price cuts of up to 13% for selected models in China through a notice on its official WeChat account. Automotive News Europe noted that it followed Tesla‘s price cuts at the start of the year, triggering a price war in the world’s largest auto market.
Price cuts on selected models
The report emphasized XPeng’s Weibo post, which revealed that the starting price of the base model G3i SUV declined to 148,900 yuan ($22,000) from 168,900 yuan (down 12%).
Meanwhile, the best-selling P7 sedan prices dropped to 249,900 yuan (down 12.5%).
The brand’s cheapest EV XPeng P5 sedan has also seen a price reduction of 13% to 156,900 yuan ($23,200) from 179,900 yuan.
Interestingly, the new G9 model’s sticker price did not change.
XPeng expects the price cuts to widen the appeal of its EVs to local customers. The automaker further claims that it would boost the brand’s competitiveness.
“The pricing adjustment is part of our approach to making smart EVs accessible to more customers, a mission that we set at the beginning of the company’s inception.
The move will increase the competitiveness of our current products, allowing a broader spectrum of users to experience the intelligent features, and creating a more favorable momentum ahead of our new product launches.
We also strive to improve efficiency, and reduce the cost of new technologies to our customers, while ensuring that customer needs and preferences are at the center of our innovation.”
XPeng
Price war
China is a highly competitive auto market that attracts almost all foreign and local automakers.
Leading American EV maker Tesla has recently lowered Chinese prices for some of its models. It initially cut the original costs of its popular Model Y and Model 3 EVs in October 2022. Interestingly, its prices were again reduced on January 6, 2023.
German automaker Mercedes-Benz also implemented price cuts on its two EV models by up to $33,000 in November.
Another automaker joining the price war is Huawei-backed Aito. This week, it reduced its EV prices by as much as 31,000 yuan (US$4,500) on three variants of its M5 and M7 models.
How can the price cuts affect XPeng?
Citigroup analyst Jeff Chung claims that XPeng would “suffer the most” as it predicts the P7 and G7 models’ impact on sales this year.
It is also worth noting that XPeng’s market share significantly dropped after the latest price cuts from its biggest rival, Tesla.
Nonetheless, XPeng claims that the price cuts are just “normal adjustments.”
“We are going to further improve supply-chain management, cost control, production efficiency and customer services.”
XPeng
As competition in the Chinese EV market intensifies, we should anticipate seeing more price reductions from EV manufacturers in the upcoming weeks. Even though many of them are still not profitable, they are currently under pressure to lower prices to maintain sales volumes.
