Byd Adjusts the Official Guided Prices of Its New Energy Vehicle Models
Author: Wu Yihan
Editor: Wu Xianzhi
On November 23, BYD announced its decision to adjust the official guided prices of its new energy vehicle models, Wang Chao, Haiyang, and DENZA, with an increase of RMB 2,000 to 6,000, and specific pricing notices for each car model will be released later. Meanwhile, it is said that the customers who sign contracts by paying deposits before January 1, 2023 will not be affected by this adjustment.
BYD stated that the purchase subsidy policy for new energy vehicles (which offers RMB 4,800 and RMB 12,600 subsidies for plug-in-hybrid vehicles and pure electric vehicles, respectively) will expire on December 31 this year. Also, since the prices of primary materials for batteries have risen sharply since the second half of this year, BYD decided to adjust the prices properly under the influence of the two factors mentioned above. This seems to be an helpless measure that results in an increase in prices due to objective reasons from customers’ perspective.
On November 23, Cui Dongshu, secretary-general of the China Passenger Car Association, said that due to the withdrawal of subsidies for new energy vehicles, there will be another round of price increases in China’s new energy vehicle market at the beginning of 2023, but the scale will not be too great.
Apparently, the rising trend of the new energy market in China for the next few months has been clarified. Some users with the intention of purchasing vehicles in the near future may seize the opportunity to buy new cars before the subsidies for new energy vehicles are cancelled and the prices increase, which is highly likely to trigger a wave of year-end vehicle purchases.
BYD and Tesla: The Reversed Path of Price Strategy
In order to achieve a goal of delivering 1.5 million vehicles annually, Tesla launched a promotion for price reduction in late October to boost sales, lowering the prices by between RMB 14,000 to 37,000. It is known that Tesla’s sales have increased slightly since the price reduction, but perhaps the increase was not as ideal as expected. Beginning in early November, Tesla once again announced its vehicle purchase incentives and offered a series of insurance subsidy programs to boost performance by the year end.
Following Tesla’s announcement of price reductions, other companies such as NIO, Mercedes-Benz, and Ford followed suit and announced price adjustments, and Xpeng also launched the “final payment reduction” activity for some of the products under its brand. This has led to speculation in different sections of the industry that domestic companies may trigger a wave of price cuts as a result.
In the face of various preferential programs provided by these companies, some consumers find it difficult to resist the temptation and decide to make choices among these “price-cutting armies.” However, some other passengers consider waiting for other companies to launch more advantageous vehicle purchase programs in the future.However, Dongshu Cui denied the above speculation, saying that there would be no widespread price cuts for new energy vehicles at the end of this year. Instead, there may be a round of price increases.
As predicted by Dongshu Cui, the actual situation is that BYD announced a price increase.
It is reported that in the third week of November, BYD’s insurance coverage reached 44,874 vehicles, which is an increase of 10.2% compared to the previous month, with a cumulative insurance coverage of 122,783 vehicles in the first three weeks. It is predicted that BYD will achieve good results of delivering 200,000 vehicles in November.
Unlike Tesla’s situation, perhaps BYD’s confidence in its sales performance makes it immune to the price reduction strategies of its competitors. Instead, it chooses to go against the trend and announces a price increase.
However, this does not affect customers who will receive their deliveries this year, and may even have a reverse stimulating effect. Firstly, some consumers hold the mentality of “buying high and not buying low”; secondly, for the dual effects of price increases and subsidy cancellations after the new year, the answer of consumers has already been clear.
Conclusion
In October of this year, Tesla delivered 71,704 vehicles, with a total delivery of 980,277 vehicles from January to October; BYD delivered 217,816 new energy vehicles in October, with a total delivery of 1,397,870 vehicles from January to October. From the delivery situation of domestic new energy vehicles in October, seven products under BYD delivered more than 10,000 units, among which BYD Song achieved the best results, while the 1.5-kilometer gap between Tesla Model Y and BYD Song ranked third.
Just a few days ago, there was news that Tesla will cut prices again at the end of the year, but the official denied the news of another price cut. However, whether to choose a product that is currently discounted or one that will be more expensive in the future depends on consumers’ willingness to consume.
From the recent sales data, BYD is relatively more advantageous. However, with less than 40 days left until the end of 2022, it is almost impossible for Tesla to achieve a comeback.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.