Correction-Focus: China’s electric SUV price cut competition intensifies, exports also hit US and European companies | Reuters

SHANGHAI (Reuters) – China, the epicenter of the price war for electric vehicles (EVs), has now turned the main battlefield to electric utility sports vehicles (SUVs), with domestic and foreign manufacturers fiercely competing. there is That has squeezed domestic profit margins, and Chinese electric SUVs have begun to seek outlets in exports.

China’s electric SUV market is crowded with more than 90 models. Domestic and foreign brands launched at least 20 new models in April, further intensifying the competition.

Chinese EV makers follow Tesla’s sharp price cuts. As a result, the price gap with internal combustion engine vehicles has shrunk, and they are stealing market share. The trend is likely to spread overseas as exports of Chinese-made electric SUVs increase.

“There will be a lot of Chinese car exports because the Chinese market is extremely competitive,” said Tu Le, founder of consultancy Sino Auto Insights. It will happen.”

China’s SUV market has grown rapidly over the past decade, accounting for nearly 40% of all recent car sales. There are 400 types of SUV models, including all fuel types. More than 11 million Chinese SUVs were sold last year, as many as all the cars sold in Europe last year.

Electric SUVs have exploded in popularity since Tesla launched its homegrown Model Y in China two years ago, making them one of the fastest-growing sectors in China, the world’s largest car market. .

At the “Shanghai International Auto Show” in April, domestic and foreign manufacturers announced new models one after another. Volkswagen (VW), BMW, Toyota Motor Corporation and other overseas automakers have high hopes for new electric SUVs to boost sales in China.

Chinese EV start-ups Xpeng Automobile and Shanghai Nio Automobile (NIO) have six SUV models, and EV brands launched by Chinese state-owned manufacturers such as Guangzhou Automobile (GAC)-affiliated Dian are also developing electric SUVs. We are promoting.

China sold 1.5 million electric SUVs last year, according to a Reuters analysis of data from the China Association of Automobile Manufacturers (CAAM). Ninety-three car models competed fiercely, with the top 10 brands holding 84% of the market share.

In 2020, before Tesla began producing the Model Y in China, the company had just 76 electric SUVs and an average annual sales of 3,000.

The Model Y recently saw a slight price increase, but it’s still 20% cheaper in China than it was in early October last year.

Xiaopeng Motor Co., Ltd. and Lexo Motor Co. countered with their own discounts, while BYD, the largest EV company, offered a $1,000 discount, about 4%, on the Song Plus SUV, which is selling well.

Manufacturers, who avoided discounting existing models in order to protect their brand value, instead set launch prices for new models lower than expected, extended cruising range, and enhanced autopilot functions.

For example, Zhejiang Geely set the lowest price of the new compact crossover “Zee-Car X” of the EV brand “ZEEKR” at $27,500, 28% cheaper than Model Y.

Honda’s CR-V, which is roughly in the same price range, saw sales fall 56% in the first quarter. A Mitsubishi Motors spokesperson also said last month (corrected) that it had halted production of the Outlander SUV in China for three months.

Mr. Le of Sino Auto Insights said the reality is “brutal” for foreign manufacturers like Ford targeting the mass market with small SUVs priced under $40,000.

Ford CEO Jim Farley said China’s exports are spurred by a fiercely competitive domestic electric SUV market. The company itself plans to reorganize its China business and transform one of its joint ventures into an export base for low-priced cars, he said.

General Motors (GM), whose profits in China plunged about 25% in the most recent quarter, will have to rely on the success of its new EVs to regain market share in the country, but it will face a very tough battle.

Tesla and Renault are already big exporters of Chinese-made electric SUVs to Europe. Reuters reported that Tesla has started production of the Model Y for Canada at its Shanghai factory. This is the first export to North America.

Meanwhile, Chinese automakers are plotting ways to expand sales of electric SUVs to Europe.

Zhejiang Geely announced that it will introduce the “G-Car X” to the European market. BYD’s ATTO3 SUV started taking orders in Europe, with exports more than doubling in the first quarter.

* Due to the correction of the English text, the part referring to Mitsubishi Motors in the 15th paragraph will be changed from “last week” to “last month.”