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The price war was launched at the beginning of the year, and the "Matthew effect" of the new energy market intensified

Publish Date: 2023.02.04

On February 2, it was reported that Weilai Automobile and Feifan Automobile had reduced the price of some of their models. Since the beginning of 2023, many new energy vehicle brands have announced official price reductions.

On January 6, Tesla announced the price reduction adjustment of the domestic Tesla Model 3 and Model Y, with the price reduction ranging from 20000 to 48000 yuan, and the product price hit a record low. As a result of the accident, Tesla's price reduction triggered car owners in Chengdu, Shanghai, Zhengzhou, Changsha and other places to defend their rights.

开年就打价格战,新能源市场“马太效应”加剧

Sales price screenshots of Tesla Model 3 and Model Y

A week later (January 13), Celis's M5 EV and M7 followed up the official announcement of price reduction, with a price reduction of 28800-300 yuan. For the old users who collected the car before this time, while announcing the price reduction, Inquirer also provided equity compensation worth 33000-35000 yuan.

In the same way, in order to appease the old car owners, Xiaopeng Automobile provided the new year feedback such as extended vehicle warranty and free 4 years of basic maintenance for the car owners who had ordered it at the same time when the official price reduction was announced on January 17.

Since September last year, Tesla has repeatedly lowered prices by means of direct product price adjustment or indirect welfare promotion. At that time, the outside world wondered whether other new energy vehicle brands would follow up?

In response, Li Bin, the founder of Weilai, said frankly in an interview with the media: "Tesla will reduce the price, Weilai will not reduce, because there is no room for price reduction, and we are all negative gross profit." An insider of Xiaopeng Motor also said, "Xiaopeng Motor has its own sales rhythm, and will determine the product price and promotional activities according to its own situation, rather than follow other auto companies."

In fact, faced with the pressure of the withdrawal of the "national subsidy" of new energy vehicles and the rising price of battery raw materials, some new energy brands set off a wave of "price rise" at the end of last year. More auto companies said that they would raise the price of their products in 2023, and put the emphasis on the promotion of "limited price". According to incomplete statistics, many enterprises, such as Xiaopeng, Oula, Geely, Chang'an Deep Blue, AITO, Nezha Automobile and Feifan, have successively issued their own "time-limited price protection" policies in December last year.

Although he said "price increase", he acted honestly. Up to now, except for a few brands such as BYD and Chang'an Deep Blue, which have raised their prices, other brands have not adjusted their prices.

In the face of Tesla's frequent price cuts, Wenjie and Xiaopeng have started to follow up. In the future, it remains to be seen whether other brands can withstand the pressure. A senior media source said bluntly, "Under the leadership of Tesla's continued price reduction, the competition in the new energy vehicle market will undoubtedly become more fierce, and the price war may be inevitable."

More than that, "Tesla still has a large capacity and space for price reduction," an expert said. "The reason why Tesla has raised the flag of price reduction is that it has a huge cost advantage."

According to the financial report released by Tesla, in 2022, Tesla will deliver 1.31 million cars; The total revenue reached US $81.5 billion, up 51.4% year on year; The net profit was 12.6 billion US dollars, with a net profit margin of 15.5%. Based on this rough estimate, Tesla's net profit per car is as high as US $9570 (about 65000 yuan).

Faced with the "butcher's knife" that may fall at any time, many industry insiders wonder whether other new energy vehicle brands have the financial resources and confidence to continue to follow up? If we follow, how long can the new forces of car building and new energy brands persist with their current car building costs and profitability. After all, there are very few enterprises that make real profits in the domestic new energy vehicle market. If not, other new energy automobile enterprises, especially those weak brands, will further erode their narrow market survival space.

Here, we recall what sociologists and economists often call the "Matthew effect". The greater the popularity of products or brands in the industry, the greater the market share it will occupy. On the contrary, those weak brands with less popularity will inevitably reduce their market share in the face of the squeeze of strong brands, which will lead to reduced profits and be eliminated by the market, and the market that they will give way to will be replaced by products or services with high brand awareness.

At the beginning of this year, Zhu Huarong, chairman of Chang'an Automobile, boldly predicted that "in the next three to five years, 60% - 70% of the automobile brands will be shut down and transferred." Qin Peiji, president of Volvo's sales company in Greater China, said more bluntly, "Many new forces regard 2023 as the year of baptism of the tram brand, but in fact, it has already begun to be washed in 2022, and it will be washed more severely in 2023."

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