Chinese automakers hope Shanghai debuts will cool Tesla-led price wars

SHANGHAI -- Chinese automakers are hoping that the Shanghai auto show will ease the industry's price wars by generating customer excitement for new models.

Tesla began cutting prices in January in the world’s No. 1 market and domestic automakers were forced to respond. Tesla reduced the entry price of its Model 3 midsize sedan to 229,000 yuan ($33,400).

The effect has been to slow the market, according to the president of premium electric brand Nio, Lihong Qin.

“Retail volume was down 14 percent in the first quarter because a lot of consumers are waiting for a better deal,” he told journalists on the sidelines of the show. “We hope the Shanghai motor show will be important to stabilize this market.”

Nio is bracing for lower volumes in the first half as it tries to sit out the price war and promote the brand’s advantages, including its battery-swapping network.

“The price war has affected our volume guidance for this year,” CEO William Li said at the same event.

The price war will be a “short-term phenomenon,” BYD’s global head of PR, Brian Luo, predicted. “From April there will be a lot of auto shows in China which will allow customers to feel impact and influence of the new energy vehicle market,” he told Automotive News Europe at the  show.

“This will help them develop a bigger picture of the market and realize what products they are interested in.”

Since the outbreak of the COVID-19 pandemic in 2020, auto shows in China have either been postponed, cancelled, or held with much reduced access.

Their return will give customers a new perspective on new models, BYD anticipates. “Right now, they are considering models based on price, but when they can interact with the cars it will be more about the user feeling,” Luo said.

“Auto shows are a very important factor to boost sales,” he said.

Luo predicts the price war will fade in May as a result.

BYD has not officially reduced prices but has offered promotions. For example, in March customers of the Seal electric sedan – a rival to the Tesla Model 3 – were offered an 8800-yuan discount.

Automakers across the brands are offering big discounts at a dealer level, one senior executive at Chinese maker said, without wanting to be named.

The Shanghai auto show saw the introduction of 100 new models of which 70 were electric, according to figures seen by Nio.

Fierce competition in the key segments, including midsize sedans and SUVs, especially in electric vehicles, has forced automakers to differentiate vehicles in terms of design and specification, as well as keeping prices low.

Technology innovations aimed at attracting customers in a competitive market include the inclusion of front scissor doors in the new Aion Hyper GT, a rival to the Tesla Model 3, while the premium HiPhi brand showed off a more accessible midsize SUV badged Y with split rear doors.