At the beginning of 2024, Tesla initiated the year’s price reduction trend by launching the “first shot” of price cuts, lowering the prices of its Model 3 and Model Y rear-wheel drive and long-range versions. This move brought the prices of Tesla’s refreshed Model 3 and Model Y to their lowest in the history of the Chinese market. Moreover, consumers are offered a 2.5% ultra-low loan interest rate if they complete their purchase before the end of March.
Following Tesla’s lead, several new energy vehicle brands quickly joined the trend. Li Auto and NIO, citing the upcoming launch of their updated models as the reason, offered discounts ranging from RMB 20,000 to RMB 25,000 on specific models.
According to partial statistics, since the start of this year, over ten new energy vehicle brands have introduced price reductions or limited-time cash discount promotions to draw in more potential customers.
A research report from Ping An Securities highlighted that leading new energy vehicle companies face growth rate pressures in 2024. Consequently, the price war they have sparked is expected to rage on, particularly within the mainstream price range of 100,000 RMB to 200,000 RMB. Additionally, the declining cost of batteries offers further room for manufacturers to engage in price reductions.
A number of new energy vehicle firms have set forth their latest annual sales goals. Predictions from the China Automobile Association indicate that sales of new energy vehicles in China are expected to reach about 11.5 million units in 2024, an increase from 9.495 million units in 2023, which equates to an approximate growth of 21%. The sales growth targets for 2024 set by these companies surpass this projection.
Overcapacity in new energy vehicles significantly influences companies’ decisions to reduce prices. Currently, the capacity utilization rate for China’s new energy vehicles stands at only 13%, indicating a considerable surplus of supply over demand. It is expected that as the industry reshuffle intensifies, the price battle will continue throughout the year.
Cui Dongshu, the secretary-general of the China Passenger Car Association (CPCA), remarked in a personal post that 2024 is a crucial year for new energy vehicle enterprises to solidify their market position, and the competition is expected to be exceedingly fierce.
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