Byd cuts the prices of electric cars up to 35% in China: because it is not a good sign and what it means to Europe
The Chinese giant rekindles the price war on the domestic market, where over 100 houses operate, almost all at loss. The production capacity is double compared to sales: Europe serves as a relief valve
Byd rekindles the price war in China. Fresh from overtaking in Tesla in Europe, Shenzhen’s giant has announced a cut of price lists up to 35% on over 20 electric models and plug-in hybrids. The largest scissor is about 6500 euros and concerns the SEAL O7 sedan, while the cost of the cheapest car – the Seagull battery -a -side utilitarian – dropped to 6800 euros.
Competition in China
The move of Byd refreshes the competition downward in China after a few months of respite. He demonstrates to what extent the group is willing to go to protect his dominance on the domestic market from the threat of a large number of rivals. Byd controls about 30% of sales in China, but he sees his increasingly undermined primacy. Thanks to the boom of electricity and generous state subsidies, Today over 100 manufacturers are active in the country, all looking for space on a market that with 25 million sales It is yes the largest in the world, but whose growth rhythm is slowing down.
The price war
Byd’s scissor was soon imitated by the main rivals that immediately responded to the attack of the market leader. Changan, a builder owned by the state, has already announced a 15% cut to the price lists, while Leapmotor, the ally brand of Stellantis, has reduced the prices of its top models of about a third. This chain reaction frightened investors who fear a collapse of the profit margins of the houses involved. The byd title collapsed by 8.3% in Hong Kongdragging the other electrical houses downwards: Geely lost 7%, Xpendg 4%and 3%.
Production surcharge
The price war does not put only the profits at risk, but in some cases also the survival of companies that challenge each other to the sound of discounts. In fact, the Chinese car industry suffers from enormous productive surcharge that the consultancy company Alixpartners estimate of both 50%: The factories of the over 100 manufacturers on the market can churn out over 50 million cars per yeartwice as much as the domestic market is able to absorb. There is enough to cover too the whole market of the European car, where not surprisingly the Chinese groups are pouring en masse, cOn an aggressive commercial strategy that could receive a new acceleration after byd’s move at home.
The spectrum of the real estate crisis
Europe alone will not just solve the problems of the excess of the offer of cars in China so much so that Someone starts to fear the risk of a re -release in the car of the real estate crisis that overwhelmed Evergrande And other Real Estate Chinese giants. The similarities are not lacking. Except very rare exceptions, including byd, Chinese houses have all operated for years for years. So far public subsidies and the hope of a market development in China and abroad has kept them afloat; If the state support should fail, however, there is a risk that a spiral of chain crash is triggered.
The warning of the authorities
Could the drastic cutting of prices by Byd prove to be the triggering event of the Chinese car crisis? Some fear seems to begin to emerge even among the Beijing authorities. A few days ago, it reports for example the Financial Timesthe National Commission for Development and Reforms has reported the risks inherent in « unbridled competition » among the manufacturers. « Some groups have adopted an ultra-low price strategy, also coming to sell under cost, » said the spokesman Li Chao. « These practices exceed the boundaries and red lines of the competition, distort the market mechanisms and harm the rules of a loyal competition – he added – therefore require corrective intervention». Words that today sound like a warning to Byd.
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