BYD, China’s leading electric vehicle maker, has rekindled the «price war.»This is because, starting..

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BYD, China’s leading electric vehicle maker, has rekindled the «price war.»

This is because, starting with BYD last month, Geely Motors and Cherry Motors competitively cut prices.

According to China’s Pengpai Shimbun on the 3rd, nearly 10 brands announced a week-long cut in vehicle prices after BYD announced on the 23rd of last month that it would apply a discount rate of up to 34% only to its 22 models.

Brands that announced price cuts include Geely Motors’ Geely Galaxy, Cherry Motors, Guangzhou Motor’s Aion, Shanghai Motor’s Long Way, Shanghai GM, Lingpao, IM’s ZG and Li Auto.

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Geely Galaxy has decided to offer a 20 percent discount on the price of seven models including the Galaxy series L6 and L7. The price of the L7 fell to 99,800 yuan (about 19 million won) due to the discount.

Cherry Motors has decided to implement a policy to provide subsidies worth a total of 10 billion yuan (about 1.9 trillion won) when purchasing vehicles. The maximum discount is 55,000 yuan (about 10.5 million won).

Ion cut up to 35,000 yuan (about 6.7 million won) for some models, while IM’s ZG, a joint venture between Shanghai Motor Company and Alibaba, started discount events only for LS6 models.

In recent years, the ‘bleeding competition’ in the Chinese automobile market has accelerated. Whenever BYD, which has risen to the top of the industry, lowers prices, latecomers follow and lower prices.

Then, at the end of last month, the China Automobile Manufacturers Association announced a «proposal on maintaining fair competition order and promoting industrial health development» and publicly opposed this price war. As the competition for new customers intensified, concerns grew that Chinese automakers’ profitability would deteriorate sharply, the Chinese government put the brakes on it, saying it would crack down on bleeding competition.

In response, China’s Ministry of Industrial Information also decided to crack down on bleeding competition, saying, «We will strengthen the automobile industry’s capacity to maintain a fair market environment and strengthen its internal 卷 competition.»

In particular, there are various interpretations in the automobile industry regarding the BYD decision that triggered the price war. The vast inventory of BYD and the implementation of new national standards for vehicle battery safety are cited as major backgrounds.

The inventory of BYD has never been disclosed, but the industry estimates that it will be more than 1 million units. Considering the recent sales speed, it will take about three months for 1 million units to run out of stock.

Some analysts say that the fact that the authorities will announce a new national standard that strengthens battery safety standards in November has affected it. This is because additional costs may be incurred if the existing model does not meet the new national standard.