Hyundai Motor, Tesla, BYD, and Volkswagen, the top four players in the electric vehicle (EV) industry, have embarked on a race to mark down electric vehicle prices in major markets. The price cuts are a defensive move in response to the double whammy of slowing demand for EVs and the recent suspension or reduction of subsidies in major countries.
On Jan. 17, China’s BYD, fiercely competing with Tesla for the top spot in the global EV market, decided to cut the price of its EVs in Germany by 15 percent, according to industry sources. The move was made in response to the German government’s decision to stop giving subsidies to EV buyers.
Analysts say that it is BYD’s offensive strategy to better compete with Tesla and Volkswagen in Germany, the heart of the European auto industry. The price cut brings BYD’s ATTO 3 sports utility vehicle (SUV) down from 47,000 euros to 39,999 euros. That is about 4,000 euros less than its rival models like the Volkswagen ID.4 (43,900 euros) and Tesla Model Y (44,900 euros).
Hyundai Motor North America is also offering discounts of up to US$7500 on the 2024 IONIQ 5, IONIQ 6, and Kona Electric in the United States through the end of January.
It is an aggressive strategy to give up some profit margins to offset the impacts of ineligibility for U.S. government’s EV subsidies. The IONIQ 6 is available for US$38,615. The price is US$1,700 less than Tesla’s new Model 3 Highlander (US$4,380). The price of the Kona EV also fell to US$25,175. General Motors (GM), which has been removed from the U.S. government’s Inflation Reduction Act (IRA) subsidy list, is also offering discounts on the Volt EV and others.
Volkswagen has also recently jumped into the price war, slashing the prices of its ID series EV models in Europe by up to 30 percent. This is the latest in a series of price cuts by automakers in response to the reduction and elimination of subsidies.
Tesla, which sparked off a price war in the global electric vehicle industry last year, is also showing a sign of nervousness. In response to the offensive by BYD, Nio, and other indigenous Chinese EV companies, Tesla has cut the price of the Model 3 and Model Y by 3 to 6 percent, including the new Model Y which was launched only five months ago.
Analysts in the global automotive industry are saying that the EV industry, which has been supported by subsidies, is facing a major transition due to the reduction or elimination of subsidies in various countries.