Weekly: BYD’s Price Cuts Escalate The Price War Between EVs And ICE-cars
Ytd, EV sales came in worse than expected. BYD’s 20% price cut on Qin Plus DM-i
triggered a new round of price war. This will leave no winner as major players will keep
engaging in the price war for a sustained period while small players like HiPhi will
possibly be edged out of the arena. Following the heavy snowfall in Hubei, the Hainan
incident reminds us of the limitation of EVs. Maintain UNDERWEIGHT. Top SELLs: BYD,
XPeng and Li Auto. Top BUY: CATL. Upgrade Xusheng from HOLD to BUY on valuation.
WHAT’S NEW
• BYD’s price cuts triggered a new round of price war. BYD lowered the entry prices of Qin
Plus DM-i and the Chaser 05 by 20% from Rmb99,800/Rmb101,800 to
Rmb79,800/Rmb79,800 respectively by launching a so-called Glory Version with
specifications equivalent to the previous versions. This implies a 10% or Rmb10,000
effective price cut, as the previous versions of Qin Plus DM-i and Chaser 05 were selling at a
10% discount to the MSRPs. In addition, BYD will hold a launch event for the Glory Version
of Dolphin on 23 Feb 24, implying further price cuts for the model. It is expected that BYD
will launch the cheaper Glory Versions for other models, eg Han DM.
• Other OEMs followed suit slashing prices. Since BYD’s price cut, several electric vehicle
(EV) companies have followed BYD’s move and slashed prices by the same or even bigger
magnitudes, including Wuling Xingguang, Neta X/S/Aya, Changan Qiyuan A05, Geely
Galaxy E8. In addition, ICE-cars have also entered the price war, with Beijing Hyundai
Elantra cutting prices by Rmb24,000 or 24% to Rmb75,800. The A-segment ICE-cars that
compete directly with BYD Qin Plus DM-i, eg SAIC Volkswagen (VW) Lavida and Dongfeng
Nissan Sylphy, will likely see bigger price cuts in the near future.
• We expect the price war to continue through 2024. This round of price war is triggered by
the weak automobile sales since the beginning of 2024 till now, especially for BYD. We
expect the price war to sustain and escalate from Mar 24 when several new models hit the
market, including Li Auto Mega, Xiaomi Su7, Tank 700HI4-T, the revamped version of Zeekr
001, Deepal C318, Tank 300PHEV, BYD Qin L, BYD Yuan Up, etc.
