Electric cars enter big price cuts 2024 in China

With the rapid development of electric vehicles, China's electric vehicles have also entered a stage of fierce price competition, this article describes the market for electric vehicles in China in 2024

Table of Content

The electric car is actually cheaper than the petrol car, and it’s a BYD, you read that right.

From last year’s “oil and electricity at the same price” to this year’s “electricity is lower than oil”, BYD this time and threw out a “king bomb”.

Some analyses say that 2023 is the first year of the price war in the auto industry, and 2024 will be the year of white-hot competition.

On February 19, BYD officially announced that Qin PLUS and Destroyer 05 Glory Edition were listed on the market, with an official guide price starting at 79,800 yuan, officially opening the era when the price of electric vehicles is lower than that of fuel vehicles in the same class, accelerating the change from oil to electricity, and comprehensively impacting the market for A-grade family sedans.

The market previously predicted that the above models will be listed at the end of February. However, on 19th February, BYD carried out a “surprise attack”.

// Why BYD?

Some industry insiders speculate that, in addition to stirring up the market and boosting sales, BYD may be making way for the new models, which have already reached the end of their product life for the Qin PLUS and Song PLUS, the main sales force. At this time to reduce the price of the old models, will provide more space for the sales of new models.

BYD revealed to the Securities Times – e company, Qin PLUS glory version, destroyer 05 glory version of the launch, the core objective is to plug-in hybrid models into the “7 words” era, to further accelerate the plug-in hybrid models of the “oil and electricity replacement” effect.

Public data show that in 2023, China’s new energy vehicle annual production and sales into the 9.5 million scale, an increase of 36%, ranked first in the world for nine consecutive years. Among them, plug-in hybrid vehicle production and sales growth rate of over 80%, becoming a major catalyst for the new energy vehicle market in 2023.

As the leader of plug-in hybrid technology, BYD launched DM plug-in hybrid models have been sold more than 3.2 million units. The source said, the product price will be further down, is to further implement BYD let “oil and electricity the same price” strategy, accelerate the replacement of new energy vehicles to fuel vehicles.

Competitive Advantages of BYD’s Entire Industrial Chain

The experts analysis that in the “plug-in hybrid lower than the price of fuel cars” behind this trick, embodies the competitive advantages of BYD’s entire industrial chain: on the one hand, BYD has a strong scale effect, in 2023 to 3.02 million annual sales to become the sales champion of the Chinese market and the global champion of the sales of new energy vehicles, through scale On the one hand, BYD has a strong scale effect.

On the other hand, thanks to the mastery of core technology, strong vertical integration capabilities and complete industry chain advantages, BYD has the initiative of pricing.

However, it is worth mentioning that in January this year, BYD sold 201,500 new energy vehicles, a year-on-year increase of 33.14%, continuing to continue the growth advantage. But the sales in that month were overtaken by Geely, Geely, BYD and Chery are very close to each other, all exceeding 2 million units.

A more competitive car market in 2024

Geely and Xiaopeng coincidentally mentioned in the open letter that “2024 will usher in more intense competition in the car market”.

On 18 February, Xiaopeng Automobile CEO He Xiaopeng and Geely Automobile Group CEO KAM Jiaxue respectively released the opening letter for all employees.

According to the content of the two open letter, He Xiaopeng and KAM Jia read that 2024 will usher in a more intense competition in the car market. Than how Xiaopeng said, this year is China’s auto brands into the “sea of blood” competition in the first year, that is, the first year of the elimination race; KAM home reading also pointed out in the opening letter, 2024 will be rolled price, rolled product, rolled service, rolled flow, will be a “most rolled In fact, the “car circle” in the first year of the elimination of the first year of the competition.

In fact, the “car circle volume” has long been the industry consensus. As early as the end of August last year, Wang Chuanfu shouted, “the next 3 to 5 years, the car market as a whole or different segments will continue to fight the price war.” In his view, the present is the era of fast fish eat slow fish, not the era of big fish eat small fish, car companies in the next 3 to 5 years, if not rushed up, there is no chance.

Overseas market may become a source of future incremental growth

According to a report by China Foundation News, in the face of an increasingly imploding domestic market, car companies are also actively seeking new growth space in the new year. In the industry’s view, exports are expected to become the second largest source of incremental growth, in addition to electrification, as Chinese carmakers continue to strengthen their overseas layout and the recognition of their models continues to rise.

Take BYD as an example, its performance has been firm, thanks to the profit support provided by exports. Data show that BYD’s annual overseas sales of new energy passenger cars in 2023 were 243,000 units, up 334.2% year-on-year, accounting for 8% of BYD’s total sales.

Since the release of the “passenger car overseas” plan in 2021, BYD has begun to accelerate the layout of globalisation, and its products have been sold to more than 70 countries and regions on six continents, and in Europe alone, it has entered 19 countries, including Norway, Germany, the UK, France, Italy and Spain, with five vehicles, and has been sold for several months in Thailand, Singapore, Brazil and Colombia. Thailand, Singapore, Brazil, Colombia and other places are the local new energy vehicle sales champion for several consecutive months.

In January 30 this year, BYD and Hungary Szeged municipal government formally signed the Hungarian passenger car factory land pre-purchase agreement, marking BYD in the European region of the localisation process has made a new substantial breakthrough.

Everbright Securities analysed that relying on overseas production bases, the car company will weaken the impact of local taxes, transport costs, policy sanctions and other negative factors, and can effectively enhance the local brand image and product competitiveness.

In the New Year’s open letter, He Xiaopeng also mentioned overseas strategy. He said that in addition to expanding its product lineup and increasing its R&D efforts, Xiaopeng Automobile will start accelerating its overseas layout in 2024.

Previously, Xiaopeng Auto has already entered the market of Norway, Sweden, Denmark, the Netherlands and other European countries. According to him, starting in 2024, Xiaopeng Auto will lay out its core markets in Europe, ASEAN, the Middle East, Latin America, Oceania and other regions, deepen the intelligent advantages of its products, and strengthen the localised adaptation of its products (including left-hand drive and right-hand drive).

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Nicole Zhou

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