GS says escalating price war in China’s EV market could ensnare BYD into net losses

$BYD COMPANY(01211.HK)$ $Tesla(TSLA.US)$ $NIO Inc(NIO.US)$ $XPeng(XPEV.US)$ Further discounts offered by carmakers in a price war in mainland China’s electric vehicle (EV) market could ensnare even the likes of top seller BYD, Goldman Sachs said. Its net profit could become zero if BYD offers another price reduction of 10,300 yuan (US$1,421) per vehicle, a fresh sign that an escalating price war in the world’s largest EV market will become detrimental to the fast-growing industry, the US bank said in a report released on Tuesday.

“If another 10,300 yuan price cut comes about (in line with our assumption for BYD), we estimate overall industry profitability could turn negative in 2024,” Goldman said.

My Take: BYD, the world’s largest EV maker, fired the first salvo in the price war in February. BYD has since slashed the prices of nearly all of its cars by 5 to 20 per cent in a promotional campaign in China. Tesla lowered the prices of its Shanghai-made Model 3s and Model Ys by more than 5 per cent on Sunday. The next day, Li Auto reduced the prices of all its vehicles by up to 5.7 per cent to bolster deliveries. According to this article, the price war appears to be triggered by BYD all along. What's important is the price war hurt the Chinese EV like BYD more than Tesla China. According to Sawyer Merritt Tesla has started to increase Model 3 price on Thursday in US hence saying Tesla started the price war is absurd.