Shulou(Shulou.com)11/24 Report--

Beijing, March 29 (Xinhua) Tesla's sharp price cuts in China backfired and the company's share in China was eroded by BYD, making Chinese carmakers expected to overtake foreign competitors in passenger car sales for the first time in 2023.

Tesla's share in China is being quickly eroded by domestic brands. In an effort to regain lost ground in the highly competitive Chinese market, Tesla began to cut car prices last year, sparking a price war in China. European, Japanese and other US carmakers have been hit. However, Chinese consumers have responded to the price cuts by buying cheaper, newer BYD models. In the first two months of this year, BYD's sales in China were more than five times that of Tesla.

Bill Russo, founder of Automobility, a foreign rival and former president of Chrysler in China, said Tesla's October price cut was a "nuclear" option that prompted most companies in the industry to follow suit. "Foreign brands are clearly losing market share, so we expect 2023 to be the first full calendar year for local brands to outsell global brands." Last year, Chinese carmakers accounted for 47 per cent of total passenger car sales, according to Automobility.

As demand for electric vehicles slows, the foreign carmakers that once dominated the Chinese market have been hit hardest. In the first two months of 2023, passenger car sales by Chinese carmakers fell only 1 per cent from a year earlier. By contrast, German carmakers are down 21 per cent, Japanese carmakers are down 40 per cent, South Korean carmakers are down 25 per cent and US carmakers are down 13 per cent.

The strong financial performance of BYD in Tesla showroom heralds its rise. As the global auto industry struggles to get rid of internal combustion engines, the company's vertically integrated structure gives it an advantage. BYD's vertical integration covers everything from mines to batteries and chips.

Wang Chuanfu, BYD's chairman, said on Wednesday that he expected first-quarter sales to grow 80 per cent year-on-year and that weaker competitors would be "eliminated". BYD had previously reported that net profit in 2022 surged more than 400% to 16.6 billion yuan ($2.4 billion).

BYD's share of the market for plug-in hybrids and pure electric vehicles in China rose to more than 40 per cent in January and February from 34 per cent last year, while Tesla's share fell slightly to 7.8 per cent.

Domestic cars are cost-effective. In February, 26-year-old engineering researcher Li Taotao bought a BYD Qin Plus DM-i. This is a plug-in hybrid car with a price of 99800 yuan.

"I think foreign brands sell cars at relatively high prices. If domestic brands are doing so well, why not buy them?" She said.

Tesla's price cut and the subsequent price war among most of China's major electric car brands come at a time when the government is scrapping state subsidies. Since 2009, China has spent more than $120 billion (CTOnews.com Note: currently about 825.6 billion yuan) to support the electric car industry.

China has one of the most advanced electric vehicle markets in the world. However, epidemic factors are a drag on car sales. The China Association of Automobile Manufacturers warned in a statement last week that the decline in sales had intensified over the past month.

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