When Chinese electric cars become three times cheaper than Tesla, it's not just competition, it's a revolution. Tesla is under threat in the largest electric vehicle market.
Chinese company BYD, a leader in electric vehicle production, has drastically reduced its car prices in the country, increasing pressure on Tesla both in China and abroad. The Telegraph reports on this.
The article notes that the price of the popular budget hatchback Seagull has dropped by 20% — it now costs 55,800 yuan (about 7,750 U.S. dollars). This is approximately 75% cheaper than the lowest price of the Tesla Model 3, which sells for 231,900 yuan (around 32,200 U.S. dollars).
Additionally, BYD announced discounts on 22 models that will be available on the Chinese market through the end of June. This move is in response to declining domestic demand and the threat of new tariffs from the EU and the U.S.
Though the Seagull is much more compact than the Model 3, its low cost illustrates how far Chinese manufacturers have come in reducing the price of electric vehicles. Today, China is the world's largest electric car market, and local companies are actively investing in creating affordable models.
The article also emphasizes that the price drop is a sign of intense competition. In April, a record number of unsold electric cars, about 3.5 million units, accumulated at dealer warehouses nationwide, marking the highest level since December 2023. The economic downturn in China also negatively affects demand.
Analysts believe this situation is a major blow to Tesla, for which China is the second-largest sales market. Sales of Chinese Teslas produced for the domestic market and Europe fell by 6% in April compared to last year. Overall, the decline in sales volumes has been ongoing for the seventh consecutive month.
Following the announcement of price cuts, BYD shares on the Hong Kong Stock Exchange fell by 5.9% as investors are concerned about declining profitability. Shares of competitors like Li Auto and Great Wall Motor also dropped in value by 3.2% and 2.7%, respectively.
Senior Economist at ING, Rico Luman, noted that this 'price war' reflects the increasing competition in the Chinese market and signals its gradual maturity.
Interest in Chinese electric vehicles is also growing in the UK. According to Auto Trader, in the first four months of the current year, the number of views of Chinese brands on their site exceeded 1.4 million, already accounting for 5.3% of the market — compared to 1.3% last year.
According to the editorial board of Auto30, the price reduction by BYD is not just a pricing war but an indicator that the electric vehicle market in China is rapidly evolving. Tesla will have to seriously adapt to maintain its positions in one of the world's largest markets.