Chinese electric automaker XPeng has just announced plans to launch a new brand that focuses on more affordable electric vehicle models amid the intensifying price war in its home market, which BYD currently leads.
Plan details
According to Automotive News China, XPeng formally announced the imminent launch of its lower-cost electric vehicle brand to penetrate the mass-market segment in China.
XPeng will reveal the yet-to-be-named brand sometime next month. The brand will focus on developing “the first AI-assisted driving car for young people.”
According to Chairman and CEO He Xiaopeng’s remarks during an industry event in Beijing on Saturday, the new brand’s product lineup will include models with a price range of just 100,000 yuan and 150,000 yuan ($14,000-$21,000).
This price range is indeed enticing, considering the 200,000 yuan – 300,000 yuan price range of premium electric cars and light trucks in the world’s largest auto market.
“We will launch a class A compact EV at a price range of between 100,000 yuan and 150,000 yuan, which will come with an advanced driver assistance system, for both the China and global markets. In future, cars with the same prices might be developed into fully-autonomous vehicles.”
XPeng Chairman and CEO He Xiaopeng said during the China EV 100 Forum
XPeng aims to cut autonomous driving technology development and production expenses by half in 2024 compared to the current 200,000+ yuan assembly costs of its smart electric vehicles.
Intensifying price war in China
The price war in China’s electric vehicle industry continues to intensify as electric automakers seek to attract the highest number of sales.
As expected, industry leader BYD is working hard to protect its market dominance by launching major price cuts across its offerings. BYD officially launched the new e2 Honor Edition on March 13 with a starting price of $12,500 (89,800) as part of its strategy to match traditional gas-powered cars’ pricing.
BYD’s move prompted other Chinese startups to join the fierce price war in the world’s largest auto market. For instance, NIO recently announced plans to roll out cheaper EVs under the new “Onvo” mass-market brand in May 2024.
BYD’s dominance
BYD is currently the world’s largest new energy vehicle (NEV) maker, selling battery electric and plug-in hybrid vehicles. In 2023, its customer deliveries reached 3.02 million BEVs and PHEVs globally, up 62.3% year over year.
In that sense, luxury electric automakers strive to steal market share from BYD by launching lower-priced models to stay competitive in the rapidly growing industry.
“The segment where EVs are priced from 100,000 yuan to 150,000 yuan is dominated by BYD, which has a variety of models targeting budget-conscious consumers.”
Eric Han, Shanghai-based advisory firm Suolei’s Senior Manager
Industry-wide, battery electric vehicle sales growth dropped 18% in the first two months of the year from 21% in FY 2023 in China.
With all that said, it is unsurprising that XPeng is now seeking to join the price war with a new dedicated brand to advance its position in the electric vehicle industry. These price cuts from electric automakers in China will undoubtedly entice more customers to shift to electric vehicles, potentially improving the sales growth decline in the January- February 2024 period.
