Fears Chinese EV price war may spill over into UK market

Price cuts of more than 30% were introduced by Chinese manufacturers for electric vehicles (EVs) in their home market over the weekend.

In what the Financial Times called a “prolonged price war”, BYD reduced prices of 20 different models by up to 34% with other manufacturers following suit.

Peter Golding, CEO at FleetCheck, said: “This looks very much like a strategy by BYD to bear reduced margins in order to gain market share and place pressure on the viability of domestic rivals in terms of profitability, and future research and development.

“The question it raises is, if they and other manufacturers are willing to do this in China, what would be stopping them adopting similar measures in the UK and other markets?

“BYD are already outselling Tesla in Europe, so they could soon have sufficient market mass that price cuts could cause genuine disruption.”

Golding noted that the EU and US have raised tariffs on Chinese EVs, but the UK has so far resisted doing the same.

“Presumably, such measures could be rapidly adopted in the event of any price war arising here, but the temptation to discount by manufacturers with huge capacity and deep pockets must be considerable,” he said.

Any prospective EV price war would be a double-edged sword for UK fleets.

“On the one hand, everyone wants to see cheaper EVs in the market in order to accelerate adoption,” added Golding. “But there has been so much disruption in this sector during the last couple of years, especially over residual values, that any disorderly marketing is likely to bring a great deal of fear and uncertainty for vehicle operators.

“What we have seen from the larger Chinese manufacturers so far is a structured approach to entering the UK market, recruiting credible dealer networks and creating impressive parts distribution facilities.

“Any price war would surely be damaging to the trust created by this kind of hard work?”

In the UK market, there has been “relatively controlled” EV price reductions over time, according to Golding. “This seems to us an approach that is much more in tune with the kind of thinking we see among the fleets with which we work,” he concluded.