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Deliveries by major Chinese electric vehicle (EV) makers dropped for the second consecutive month in February, raising worries that a bruising price war may be imminent even though the month included an eight-day break in sales over the Lunar New Year holiday.
Beijing-based Li Auto, mainland China’s nearest rival to Tesla, delivered 20,251 vehicles in February, down 35 per cent from January, following a decline of 38.1 per cent in the previous month. Nio, based in Shanghai, reported 8,132 deliveries, down 19 per cent month on month, compared to a January drop of 44.2 per cent. Guangzhou-headquartered Xpeng handed 4,545 vehicles to customers, down 44.9 per cent, after it posted a 59 per cent fall in January.

“Weak sales [in February] were expected, but a two-straight-month decline bodes ill for the Chinese electric car market where a new round of price cutting is taking shape,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “Escalating competition in a slowing market will kick some underachieving players out this year.”

Li Auto, Nio and Xpeng are viewed as China’s best response to Tesla because they offer intelligent vehicles featuring autonomous driving technology, digital cockpits and high-performance batteries.

Xpeng’s G9 model on display at the China International Supply Chain Expo (CISCE) in Beijing on November 28, 2023. Photo: Reuters

Tesla, which sells its Shanghai-made Model 3 and Model Y vehicles on the mainland, does not report monthly sales in China. According to the China Passenger Car Association (CPCA), the US carmaker delivered 39,881 units to Chinese customers in January, down 47.4 per cent from a month earlier.

China’s is the world’s largest EV market, with its sales accounting for about 60 per cent of the global total.

But EV makers are also grappling with fiercer competition this year amid worries about severe overcapacity in the market.

China’s Li Auto delivers electric minivan with fridge to lure wealthy families

On February 18, BYD, the world’s largest EV maker, launched a new version of its plug-in hybrid, the Qin Plus DM-i, with prices starting at 79,800 yuan (US$11,085) – 20 per cent below the previous edition.

Three carmakers, including a venture General Motors is part of, followed suit and priced their bestselling battery-powered cars below the 100,000 yuan threshold, escalating a price war that could accelerate the transition from petrol vehicles to EVs in China.

EV sales in mainland China grew by 37 per cent year on year in 2023, but Fitch Ratings has forecast that sales will expand by only 20 per cent this year.

Cui Dongshu, general ­secretary of the CPCA, predicted last month that most carmakers would offer discounts and engage in a price war to retain their shares of the market in 2024.

Li Auto, the only profitable company among the Chinese EV trio, said on Monday that its deliveries in the January to March period could decline by 21.9 to 24.1 per cent to between 100,000 and 103,000 units, compared with 131,805 in the previous quarter.

China’s US$28 billion overseas EV investment holding a charge despite backlash

The company posted net income of 5.75 billion yuan in the three months ending December 31, up 104.5 per cent quarter on quarter.

Nio and Xpeng have yet to publish their quarterly results.

The Lunar New Year holiday ran from February 10 through February 17 this year. Last year it was in January.

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