China’s EV market is off to a slow start in 2024. With sales growth slowing in the current quarter compared to the last quarter of 2023, companies are already turning to price cuts and other incentives to sustain growth.
Now, there may be a premium EV startup in China. A more affordable direction to increase sales. On Saturday, Xpeng announced that it will launch a new brand that is 50% cheaper than other premium models on the market — and that the new models will hit the market in just one month’s time.
Shares of Xpeng rose more than 7% in Hong Kong trading on Monday.
Xpeng CEO He Xiaopeng said the company will sell the new models for between 100,000 and 150,000 Chinese yuan ($13,894-$20,841), half of the 200,000 to 300,000 yuan ($28,211-$7m, ium 42) for the regular model. is close to the price.
In an interview with the state broadcaster cctv, The Xpeng CEO also said that its mass-market models will come with an autonomous driving system.
The Chinese startup, founded in 2014, has long positioned itself as a premium brand. Xpeng’s P7 sedan, one of its best-selling models, currently starts at 209,900 yuan ($29,608). The company’s EV currently starts at 200,000 yuan ($28,211).
Go down to the market
But now Xpeng is trying to break into the mass market, defined by EV giant BYD and its cheaper models. BYD sell out 3.02 million vehicles last year, mainly in China, with the majority priced below 200,000 yuan ($28,211).
Other EV companies are also going under. Fellow Chinese EV startup Nio will unveil its mass-market brand, the company, in May said last week.
And outside of China, US-headquartered Tesla has promised to launch an entry-level vehicle priced around $25,000 in late 2025.
Read more: Smartphone maker Xiaomi turns Apple into Tesla challenger as its first EV hits 120,000 orders in 36 hours
Price wars, first sparked by Tesla in late 2022, have become a feature of China’s EV market as brands try to stay competitive. CreditSights, a Fitch company, expects price competition to remain “intense” across market segments.
Even BYD is cutting prices. The company earlier this month cut the price of its cheapest car, the Seagull, by 5 percent and set the starting price for a new version of its Yuan Plus crossover, called the Atto 3 in overseas markets — at 119,800 yuan ($16,899). , down 12% from its predecessor.
But selling more affordable cars can put pressure on profit margins. Xpeng reported a margin of -6.1% for the quarter ending September 30, 2023. The company reported a net loss of 3.89 billion yuan ($550 million) for the quarter.
Xpeng will report fourth-quarter and full-year earnings on Tuesday.
Credit : fortune.com
