I recall the Chinese EV market getting into an extreme price war a couple of years ago, and then another one, and then another one…. The market has been in a series of prices for a long time, and BYD reportedly started another one recently. Some other big players in the market are not happy about it.
As I recently wrote in regard to Geely and statements from its chairman, Li Shufu, “Interestingly, Shufu also took a stand against price wars. He emphasized that he saw ‘cutthroat price competition’ as a race to the bottom and preferred to focus on ‘technology, quality, service, brand, and ethical battles.’”
Great Wall Motor has had beed with BYD and its price cuts going back at least a couple of years. The company actually reported BYD to regulators in China with claims that two of BYD’s best-selling models, two hybrids, didn’t meet emissions standards. Last month, Great Wall Motor Chairman Wei Jianjun said the regulatory probe was ongoing. (That seems a long time for such a regulatory probe, but what do I know?) Geely has gone ahead and backed Great Wall Motor up on this issue. “Wei Jianjun is a genuine, honest person and is our industry’s whistleblower,” Geely VP Victor Yang said on Saturday.
In particular, Great Wall Motor alleged that the Qin Plus PHEV and Song Plus PHEV used non-pressurized fuel tanks, which meant fuel would evaporate quicker than in pressurized fuel tanks. Reuters reports that BYD’s general manager of branding and public relations, Li Yunfei, posted on Weibo on Sunday “saying that the non-pressurised tanks used in its cars between 2021 and 2023 were compliant with the regulatory requirements at the time but added that BYD had since changed them due to customer complaints,” but that the post was then gone on Monday, June 9. Hmm … curious.
Now we get to the headline of this story. China’s Ministry of Industry and Information Technology (MIIT), which is reportedly one of the parties engaged in the BYD emissions probe, has told the industry that it needs to stop the current price war, and reportedly convened automakers for a special meeting last week. Notably, there was a big selloff of Chinese automaker stocks in response to the latest price war. (Or should we just call these situations price battles at this point?)
Hmm, what will come of all this. Also, regarding EV price wars going back a couple of years, at which point do we just say this is part of the ongoing cost declines in the EV battery and EV industry due to scaling up of production, economies of scale, technological and manufacturing innovation, and the general learning curve of a new-ish, fast-growing industry? How much of it is artificial price war and how much of it is the natural cost-cutting of an exponentially growing tech industry? Flat-screen TVs are far cheaper than they were a couple of decades ago. Is that because of price wars or because of natural price trends that come in an industry that grows from nothing or niche to mass market? Well, I guess it could just be a bit of both. That’s what Geely and Great Wall Motor are saying. On the other hand, though, BYD seems to contend that it’s just innovating faster than others, while also addressing consumer concerns along the way.
Let’s see where this all goes. Stay tuned for episode 354.
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