(Bloomberg) — The electric vehicle price war in China is getting even uglier as top players like Tesla Inc. launch new models and others aggressively cut prices in a bid to stem slowing growth in the world’s biggest auto market.
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Tesla became the latest to kick things off Friday when it unveiled its highly anticipated revamped Model 3. Minutes later, Elon Musk’s company slashed prices across its range of Model S and X cars in China and the US.
Guangzhou-based Xpeng Inc. was quick to follow. Seen as one of the most direct competitors to Tesla, it said it will now offer discounts on its flagship P7i sedan of up to 24,000 yuan ($3,300) for the month of September.
Other automakers have also piled in with Zhejiang Leapmotor Technologies Ltd. discounting the price of its T03 compact hatchback by up to 10,000 yuan this month, according to a Weibo post.
There were signs that China’s intense EV price war, which has eaten into automakers’ margins, was starting to abate in June and July but Friday’s action has cast doubt over that.
Carmakers are struggling to defend their share in a shrinking market as China’s economy slumps. Overall car sales for July fell 2.3% versus last year, while EVs and plug-in hybrids grew at 32% — still robust but a far cry from the 117% surge seen the same time in 2022.
EV companies are also adding to their war chests. While this will help some survive for longer, it could draw out the costly fight.
“If you’re not the latest and greatest, you are left with price discounts as your only weapon,” Bill Russo, a former Chrysler executive who’s now chief executive officer of Automobility Ltd., a Shanghai-based consultancy, said, in reference to Tesla’s latest moves.
Geely Automobile Holding Ltd.’s Zeekr EV brand has filed paperwork to go public in the US while Avatr, a joint venture between Chongqing Changan Automobile Co. and battery making giant Contemporary Amperex Technology Co. Ltd. (better known as CATL), said Thursday it’s raised 3 billion yuan in Series B funding. Avatr is known for its driver assistance technology.
IM Motors, the EV brand backed by Alibaba Group Holding Ltd. and SAIC Motor Corp., is seeking to raise about 6 billion yuan, Bloomberg News reported Friday.
New models are also being launched in China at an unrelenting pace.
On Friday, Zeekr launched the 001 FR luxury sports EV, a car that aims to attract customers away from Tesla’s Model S Plaid, the high-performance version of which just had its price cut by 19.4%.
The high performance 001 FR produces 1,265 horsepower and can accelerate from 0 to 100 km per hour in 2.07 seconds — outperforming similar EVs in a rolling start scenario including the Model S Plaid, which clocks in at 2.10 seconds according to Tesla’s website. With Zeekr’s fast charge network, the sports car can be charged from 10% to 80% in 15 minutes, the company said.
Zeekr is also discounting its flagship 001 sedan by up to 37,000 yuan until the end of the year, taking the entry level version down to 269,000 yuan to be more closely in line with Tesla’s similarly sized Model Y, which is selling at 263,900 yuan.
(Updated with more details on Zeekr 001 FR and IM Motors fund raising)
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