Why is the price reduction trend reappearing in the new energy vehicle market?, Tesla Announces Price Adjustment Brand | Car Market | Trends
On August 14th, Tesla China announced another price adjustment. The starting price of the Model Y Long Range Edition has been adjusted from 313900 yuan to 299900 yuan, the Model Y High Performance Edition has been adjusted from 363900 yuan to 349900 yuan, and the Model 3 has also launched a limited time insurance subsidy of 8000 yuan.
Compared to the past, Tesla's price reduction this time is not significant and does not involve basic models, but the timing of price adjustments is very sensitive. Since the mid year price war among car companies slightly stalled, the domestic car market has once again launched a promotional model in August, with more and more car companies officially announcing price reductions.
For example, on August 11th, Jike Motors announced that from now until the end of the year, the Jike 001 model will receive a maximum discount of 37000 yuan, and the starting price will be reduced to 269000 yuan. The day before, SAIC Volkswagen Skoda launched a limited time promotion for its mid size vehicle, the Pi. The model, originally priced at 174900 yuan, was priced at a staggering 131900 yuan, while also offering "soft price reductions" such as a three-year exchange fund of 25000 yuan.
According to incomplete statistics, more than 10 brands including SAIC Volkswagen, SAIC Volkswagen Skoda, SAIC MG MG, Zero Run, Chery New Energy, Great Wall Euler, Nezha, NIO, etc. have announced price reductions or disguised discounts in August, involving more than 20 models. Among them, the Volkswagen brand of SAIC Volkswagen has experienced the highest decline, with 9 SUV models under its umbrella having undergone price reductions. The comprehensive discount for the 2023 Volkswagen Touareg and Touareg X can reach 60000 yuan.
In the first half of this year, governments across the country introduced a large number of preferential policies for car purchases, coupled with price wars among car companies, which greatly stimulated the potential of domestic consumers for car consumption and also boosted the production and sales of car companies. Especially with the rapid growth in sales of new energy vehicles, many new energy vehicle companies have profited from early promotions.
In fact, July and August were originally the traditional off-season of the Chinese car market, but according to data from the China Association of Automobile Manufacturers, the retail sales of passenger cars reached 1.775 million units in July this year, which is the second highest point of sales for the year. However, July in previous years has generally been the lowest point of normal monthly sales, second only to February. This year, July has shown a mild month on month decline trend above the peak in June, still belonging to a strong trend.
On the basis of such high sales, the new energy vehicle market still showed a trend of "price reduction" in early August, reflecting the fierce competition of new energy vehicles in China. Cui Dongshu, Secretary General of the National Passenger Car Joint Conference, stated that there is a contradiction between "rapid production capacity growth" and "relatively insufficient demand" in the automotive market, which has led to continuous "internal competition" in the first half of the year. From electric vehicles, plug-in hybrid vehicles to fuel vehicles, from price to product, from marketing to channels, the automotive market is facing unprecedented intense competition.
In early July, at the 2023 China Automotive Forum, 16 car companies including Tesla, BYD, Great Wall Motors, and SAIC signed a commitment letter to maintain a fair market order in the automotive industry, promising to "adhere to industry rules and regulations, regulate marketing activities, maintain a fair competition order, and not disrupt the fair competition order in the market with abnormal prices.". However, soon the China Association of Automobile Manufacturers deleted the term "price" on the grounds of violating the spirit of the Anti Monopoly Law.
At the beginning of this year, due to frequent price reductions of new energy vehicles, the price war among domestic car companies began. In addition, with the cessation of sales of vehicles below the National VI B standard by the middle of the year, the pressure to destock gasoline vehicles has increased sharply, and the price war has spread to the entire automotive market. Cui Dongshu believes that in the second half of the year, as the impact of the price war brought about by the National VI B policy subsides and the pressure of price promotions in the fuel vehicle market weakens, the mentality of dealers tends to stabilize, and the price trend in the fuel vehicle market will inevitably return to normal in the second half of the year. However, the competitive situation in the new energy vehicle market is still unstable, and many car companies hope to further increase their market share in the new energy market, and occupy a dominant position in the market by increasing scale and reducing costs.
