[News] Chinese EV Leader BYD Pressures Suppliers for 10% Price Cuts, Sparking Fears of an EV Price War

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Due to the fierce price competition in China’s automobile market, according to a report from Commercial Times, on the 27th, leading new energy vehicle (NEV) manufacturers BYD and SAIC Maxus have reportedly requested their suppliers to reduce prices by 10%. As many other companies may follow BYD’s lead, the Chinese car market is likely to face a new wave of price cuts before the end of the year.

The report notes that, citing a report from Sina, an internal email from BYD’s passenger car division to its suppliers revealed that competition in the NEV market is expected to intensify significantly in 2025. To enhance the competitiveness of BYD’s passenger cars, the company urged the entire supply chain to work together to reduce costs and requested its suppliers to implement a 10% price reduction starting January 1, 2025.

The report indicates that BYD’s demand for price reductions from suppliers has sparked widespread discussion in the market. As the report notes, some people argue that BYD should not lead the industry in further compressing supply chain profits, especially at a time when many companies are already grappling with financial losses. Some have even accused the automaker of initiating yet another price war.

As noted in the report, BYD responded by clarifying that annual price negotiations with suppliers are a standard practice in the automotive industry. The company explained that while BYD has set price reduction targets for its suppliers based on its large-scale procurement operations, these are not mandatory, and suppliers can negotiate to decide whether to comply.

Meanwhile, the report highlights that, BYD announced that it had become the world’s first carmaker to produce 10 million NEVs earlier this month. According to the report, BYD’s production volume for the first 10 months of this year reached 3.297 million vehicles, an increase of 36.3% year-on-year, already surpassing its total output for 2023. BYD’s cumulative sales for the first three quarters of this year reached 2.7478 million vehicles, with full-year sales in 2024 expected to exceed 4.2 million units.

In addition, the report points out that, citing China Securities Journal, SAIC Maxus also sent a letter to its suppliers on the 25th, highlighting the severe oversupply in the current car market. With a large number of new models entering the market, the imbalance between supply and demand is expected to persist, making it difficult to resolve ongoing price wars. SAIC Maxus invited suppliers to participate in a cost-control project, aiming to ask suppliers reduce costs by 10%.

The report, citing industry sources, highlights that in the first three quarters of this year alone, the number of discounted passenger car models in China reached 195. This figure surpasses the 150 models discounted throughout 2023 and the 95 models in 2022.

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(Photo credit: BYD)