New Energy Vehicles Cut Prices, Micro Electric Cars Join The Fray

Against the backdrop of falling prices of raw materials for power batteries, new energy vehicles have started a new round of price cuts.

On April 14, Tesla lowered the prices of new cars in Denmark, Singapore and Germany in one day. Prior to this, on April 12, Tesla Hong Kong announced that it would adjust the prices of Model 3 and Model Y, two main-selling models, on April 15, with the highest price reduction approaching 15%. Earlier on April 7, Tesla also lowered its prices in the United States, with an overall reduction of between 2% and 6%.

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In this round of global price cuts by Tesla, its prices in the Chinese market have not changed for the time being. However, more local new energy vehicle brands have launched a new round of price wars.

On the same day that Tesla lowered its prices in the United States, its biggest competitor BYD also launched a preferential car purchase activity. Its Seal model has a comprehensive discount of up to 31,000 yuan, and the discounted price falls below 200,000 yuan. This preferential strength is greater than the special limited-time marketing activity for Seal in March. At that time, users who placed an order could enjoy a deduction of 88 yuan for a car purchase of 8,888 yuan, equivalent to a reduction of 8,800 yuan.

Another brand that continues to increase discounts is Changan’s Deep Blue Auto. On April 10th, Deep Blue Auto launched the "Deep Blue Brand Anniversary Celebration" event, which not only provided a cash subsidy of 12,000 yuan, but also financial subsidies and insurance cash subsidies of 6,000 yuan and 4,000 yuan respectively. In March, Deep Blue Auto also launched a comprehensive subsidy of up to 42,000 yuan, limited to 10,000 units, and the deadline was until the end of that month.

Geely’s new energy brand Geometry Auto also launched a preferential subsidy activity. From April 1st to April 30th, Geometry E, Geometry G6 and Geometry M6 three models launched a limited-time feedback subsidy activity. Among them, Geometry G6 and Geometry M6 have a maximum subsidy of 13,000 yuan and Geometry E has a maximum subsidy of 10,000 yuan.

Another major new energy brand under Geely’s Rui Lan Auto directly lowered its official price. On April 9th, Rui Lan Auto issued an explanation on the price adjustment of Rui Lan 9. The official guide price of this car was officially adjusted from that day. The highest price reduction was 20,000 yuan.

A notable feature of this round of price cuts is that micro electric vehicles have also joined the battle. At the end of March, Chery New Energy lowered the official guide prices of QQ Ice Cream, Little Ant and Boundless Pro, three micro electric vehicles. QQ Ice Cream and Boundless Pro dropped by 4,000 yuan and 5,000 yuan respectively, while Little Ant’s price reduction ranged from 5,000 yuan to 9,000 yuan.

On April 8th, Dongfeng Nano announced that its model prices were adjusted back, with a maximum drop of 6,000 yuan. After the price adjustment, the EX1 PRO sells for 49.7 thousand to 52.7 thousand yuan, and the Nano BOX sells for 54.7 thousand to 74.7 thousand yuan. The head enterprise of micro electric vehicles, SAIC-GM-Wuling, launched a welfare car purchase activity on April 10th. Customers who purchase Wuling new energy models before May 31st can enjoy a maximum subsidy of 10,000 yuan. All models under Hongguang MINI can enjoy related discounts.

In this round of price cuts, many new energy vehicle companies have attributed the reason to the callback of raw material prices. For example, Chery New Energy stated in its statement that this round of price cuts was benefited from the global new energy raw material price callback, as well as the company’s cost control and supply chain management capabilities.

Affected by the supply-demand relationship, the price of lithium carbonate, an important raw material for power batteries, has been falling since the beginning of this year. The latest data released by Shanghai Steel Union on April 14 showed that battery-grade lithium carbonate fell by 2,500 yuan/ton, with an average price of 192.5 thousand yuan/ton. This price has fallen by nearly 70% compared to the historical high in November last year.

The continuous decline in lithium carbonate prices has reduced the cost pressure of downstream vehicle companies and increased their price reduction space. Therefore, it is not ruled out that more new energy vehicle companies will push for further price reductions or enlarge their equity in the future.

However, it should be pointed out that in the price war in March where fuel vehicles and new energy vehicles participated together, some companies’ "benefit but not reduce" behavior caused market price confusion and led to consumers’ wait-and-see mentality continuing to increase. Although the retail volume of passenger car market increased by 14.3% month-on-month in March, this was also the weakest month-on-month growth rate in March since 2000.

The China Association of Automobile Manufacturers pointed out that the recent decline in prices of lithium carbonate and other materials is conducive to manufacturers launching more cost-effective new models of new energy vehicles, and the market attention will also continue to heat up. But at the same time, the recent price cuts by new energy vehicle companies may also trigger purchase wait-and-see.