Automakers In China Pledge To Restore Stability After Tesla’s Price War

The chaotic price war might end in China after Tesla triggered a wave of price cuts early this year.

Nio ET7

Suvrat Kothari

By: Suvrat Kothari

Jul 6, 2023 at 12:59pm ET

Add InsideEVs as a preferred source in Google

Comment

The ongoing price war in the Chinese auto industry might cool down after 16 automakers and the China Association of Automobile Manufacturers (CAAM) signed a pledge today to maintain a fair market structure at the 2023 China Auto Forum in Jiandang, Shanghai.

Tesla triggered an EV price war globally, after slashing prices of its models on multiple occasions this year. The move caused turmoil in the Chinese automotive market on many fronts: customers who bought Teslas just before the price cuts were furious, while some 30 carmakers were compelled to reduce prices to maintain competitiveness.

There were fears that smaller players who cannot sustain price cuts might be forced to shut shop, partner up or consolidate.

To ease the tensions caused by the price war, all major automakers in China have signed a commitment to safeguard the market framework. The list includes Dongfeng Motor, China FAW, SAIC, BAIC, Changan Automobile, GAC, Chery, JAC, Geely, China National Heavy Duty Truck, Great Wall Motor, BYD, Nio, Li Auto, Xpeng, and Tesla, according to Cnevpost.

Read More About The Turmoil Caused By Tesla's Price War:

Polestar Has "Different Aim To Tesla" And Won't Engage In Price Wars

Tesla's Price Cuts Are Putting Extra Pressure On EV Startups

Although, note that the letter signed by executives of the aforementioned brands is not legally binding and is self-regulatory. Here’s an excerpt:

First, we will abide by the rules and regulations of the industry, regulate marketing activities, maintain a fair competition order, and not disrupt the fair competition order of the market with abnormal prices.

Second, we will pay attention to marketing methods, will not exaggerate or conduct false marketing, and not to mislead consumers to attract attention and increase customer acquisition.

Third, we will put quality first, and use quality-oriented, high-quality products and services to meet people's needs for a better life.

Fourth, we will actively fulfill our social responsibility, and take an active role in helping to stabilize economic growth, increase confidence and prevent risks, and work together to make a contribution to national economic growth.”

For the biggest players in the new energy vehicle (NEV) space, Tesla and BYD, the price war seems to have delivered huge dividends, possibly at the expense of some of their smaller rivals. Sales hit a record high in the second quarter of 2023 for both brands.

What do you think?

View

Comments

Tesla reportedly holds only 7 percent of the market share in China, whereas it has 60 percent of the BEV market share in the US. The signed letter does not guarantee price stabilization, and carmakers might continue to fluctuate prices depending on a myriad of economic factors. Although, it might be an early sign of automakers moving forward in good faith.

Do you think automakers should vouch for a similar truce regarding prices in the US as well? Leave your thoughts in the comments.

Source: Cnevpost

We want your opinion!

What would you like to see on Insideevs.com?

Take our 3 minute survey.

- The InsideEVs team

Share this Story

GO TO COMMENTS

(

)

Got a tip for us? Email: tips@insideevs.com

View all comments ( )

Trending

Kia EV3 Lease Deals Are Here, And It’s Cheaper Than The Chevy Bolt And Nissan Leaf

I Let Android Auto Plan My EV Roadtrip. Here’s How It Worked

This Chevy Bolt Has 470,000 Miles. Here’s How Much A New Battery Was

Here's What It's Like To Take Delivery Of A Rivian R2