CHINA: Tesla Inc. and BYD are the market leaders in the SUV-styled electric vehicle market, which has its origins in China. With 20 new models announced in April, the market is expected to become even more congested, resulting in increased domestic pricing and margins.
Chinese EV manufacturers have followed Tesla’s aggressive price reduction by slashing costs for their own electric SUVs. Analysts believe this will cannibalise sales of ICE vehicles. With an increase in electric SUV exports from China, the trend will catch on internationally. Tu Le, the founder of Beijing-based advice business Sino Auto Insights, believes it will serve as a pressure release valve.
The SUV market in the country has grown significantly in the past ten years, accounting for 40% of new car sales and offering 400 different models. In 2022, 11 million SUVs were sold in China, nearly the same number as in Europe. Tesla’s Model Y has caused a meteoric rise in popularity, making it one of the fastest-growing market sectors globally.
The Shanghai Auto Show featured both domestic and foreign brands, with traditional automakers relying on electric SUVs to increase sales. Made-in-China EV startups offer six variants, while state-owned Chinese automakers push all-electric SUVs.
Prior to Tesla starting to make Model Ys in China in 2020, there were 76 electric SUVs on the market, with 3,000 units sold on average annually. Tesla’s Model Y is still 20% less expensive in China than it was in early October, when the American automaker was battling growing inventories, despite recent slight price increases.
Xpeng, Leapmotor, and BYD have retaliated with discounts, while BYD has offered a $1,000 discount on its top-selling Song Plus SUV. Companies that refuse to reduce prices on existing models to maintain brand value have chosen to do so. Geely’s Zeekr X is priced at $27,500, 28% less than Model Y and nearly the same as Honda’s CR-V.
Mitsubishi Motors and Ford announced a three-month manufacturing halt of their Outlander SUV in China. Ford CEO Jim Farley acknowledged the fierce market competition for two-row, SUV-styled EVs as a contributing cause to the increase in China’s auto exports.
Ford will also reorganise its activities in China to serve as a hub for the export of affordable commercial combustion and electric vehicles.
General Motors is relying on the performance of new EVs to regain market share in China, but the stakes are high. There are 100 car manufacturers competing for sales in the country, and the European market for electric SUVs is a target market for Chinese automakers.
BYD’s Atto 3 SUV saw an increase in exports, while Zeekr announced it would deliver the Zeekr X to Western Europe.
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