Chinese price war: BYD lowers Han sedan price by 14% (update)

China’s top EV maker, BYD, keeps on pushing further in the price war it started two weeks ago, now targeting the mid-to-high-end EV market, according to Chinese media, by lowering the prices of its Han sedan and Tang SUV hybrids by 11 to 14%. The fully electric Han gets an update as ‘Glory Edition’ costing 30,000 yuan (€3,844) less. The Tang EV didn’t get an update.

The Han EV Glory Edition launched on Wednesday, now retails in China for 179,800 yuan (€23,040). To compare, the Han EV currently sells for €54,990 in Belgium, and the Tang for €59,990.

With this ‘Glory Editions’, BYD wants to prove in its homeland that fully electric versions are becoming less expensive than their ICE siblings. But it’s a nail-biting experience for other EV makers, too. BYD sold just over three million NEVSs (New Energy Vehicles) in 2023, aiming for four million in 2024.

Dolphin price down

Just two days earlier, after lowering the price of two so-called New Energy Vehicles (NEVs), two sedans, China’s biggest EV maker further undercuts traditional fuel models with internal combustion engines (ICE) by launching a cheaper version of the Dolphin at 98,800 yuan or €12,781.

Whether BYD will lower prices in Europe, too, for its Dolphin, which was chosen as VAB’s Family Car of 2024 in Belgium, is not clear yet /BYD

This Honor Edition gets a modest 32 kWh battery for a 302 km (CLTC) range. That’s nearly 5% cheaper than the previous model. The Chinese versions differ from those launched in Europe but now come closer with an updated independent rear suspension. Whether the EU versions will see a similar price cut, too, in the near future, is still unclear.

BYD announced earlier that its fully electric Qin Plus EV Glory Edition will come in a version with a starting price of 109,800 yuan or €14,127. That’s 20,000 yuan or €2,573 lower than the previous lowest-priced versions for an ‘A-segment’ sedan. In China, this means a ‘mid-size’ car, what we in Europe rather call a ‘C-segment’ car, like a Corolla or Mégane, up to a D-segment car, like a BMW3 or Volkswagen Passat.

The price war raging through the Chinese automotive sector will remain fierce in 2024, the chairman of China’s Passenger Car Association (CPCA) wrote in an article published on Monday last week.

40% less than a Corolla

The PHEV versions of BYD’s compact sedans Qin Plus DM-i and Chaser 05 Glory Edition now start at 79,800 yuan (€ 10,270), far lower than bestselling gasoline-powered cars like Volkswagen’s Lavida and Toyota’s best-selling Corolla.

The BYD Qin Plus EV Glory Edition, what we rather would call a D-segment sedan, will start at 109,800 yuan or €14,127 /BYD

Far lower means nearly 40 percent less than the basic Corolla, which was launched initially at 113,800 yuan (€ 14,643). But most Chinese Toyota dealers now effectively sell it on par with the BYD prices. To compare: in Belgium, the hybrid Corolla starts at €31,520, coming from €35,820 before.

Making carmakers tremble

There is no mistaking BYD’s intentions as it stated it was “officially opening a new era of electricity is lower than oil” and added on the Weibo micro-blogging site, “these prices will make gasoline carmakers tremble”.

And not alone gasoline carmakers, but also EV makers, as in Europe today, the debate is flaring up that our own industry isn’t capable of producing enough affordable EVs, which leads to a certain cooldown in EV uptake by private sellers.

Only 17% of compact EVs in EU

Just 17% of electric cars sold in Europe are compact vehicles in the cheaper (and even smaller) B segment, compared to 37% of new combustion engines, a new analysis by Transport & Environment finds. According to the environmental lobbying group that conducted the research, carmakers are slowing EV adoption by prioritizing sales of larger, more expensive electric cars.

According to the report, only 40 fully electric models were launched in the compact segments (A and B) between 2018 and 2023, compared to 66 large and luxury models (D and E). In Europe, 28% of electric sales are in the large car D segment, compared to just 13% of new combustion cars, according to T&E’s analysis of 2023 sales figures from Dataforce.

‘Huge state subsidies’

EU Commission President Ursula von der Leyen stated in September last year that the EU will launch an investigation into China’s state support for makers. “Huge state subsidies artificially reduce the price of Chinese electric cars, and this is distorting our market,” von der Leyen said, undoubtedly pushed behind the scenes by the French.

But according to the Chinese, raising import taxes on Chinese cars would be “naked protectionist behavior”. At a national level, China uses exemptions on consumption tax to help lower production costs for EVs and fuel cell vehicles.

Phased out in 2022

In China, consumption tax must be paid by manufacturers of luxury and environmentally unfriendly goods, including cigarettes and cars. At the same time, consumers have been spurred with purchase subsidies and relief from vehicle purchase tax.

Consumers could get purchase subsidies and were exempt from purchase tax. Still, as the market matured, these were phased out at the end of 2022, according to the London-based non-profit organization China Dialogue. Now, it’s a clear price war that rages to lure in the consumer, and this can go on for years.

New technologies are replacing old ones

“The process of new manufacturers replacing old ones in establishing a new market order will likely continue for several years until a new landscape is formed,” wrote chairman Cui Dongshu of the CPCA. The root cause of the price war is that new technologies are replacing old ones and NEVs are replacing fuel vehicles, he said.

The cost of building electric vehicles has dropped as lithium prices have fallen and battery costs have been lowered, Cui said, adding that the scale effect brought about by the rapid development of NEVs has also led to better profit margins.

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