China’s EV price war is just getting started

livemint.com:

With a historic round of price cuts this month, Tesla, Li Auto and a host of others have extended China’s monthslong electric-vehicle price war into a new quarter. Some say the fight is just getting started. EV makers in the world’s biggest market for electric and hybrid vehicles have been cutting prices en masse since last year, when slowing sales and rising competition from upstarts forced a rethink of the playing field.

This month, prices were cut or incentives offered on more than 40 EV models, amounting to some of the largest reductions in China auto market history. CCB International analyst Qu Ke said he expects “growing and intensified competition" into the third quarter, given the current oversupply and soft consumer sentiment in China. Nomura analyst Joel Ying said the current level of competition could last for two to three years before the market enters a new, stabilized stage, potentially trimming the field to a handful of survivors.

Drivers in the short term include a new batch of models launching this week at the Beijing Auto Show and coming government subsidies for trade-ins that have companies competing to capture an expected uptick in demand. Tesla’s fresh announcement that it plans to roll out cheaper models early next year could add to the pressure. One likely outcome of prices in free fall is that the popularity of alternative-energy vehicles will continue to rise, cementing their place atop China’s auto market.