Chinese EV price war raises fear of similar strategy in the UK
A round of dramatic price cuts by Chinese manufacturers in their domestic market this weekend has raised the possibility of a similar strategy being adopted in the UK, FleetCheck says.
The Financial Times is reporting that BYD has “fired a new salvo in a prolonged price war” by reducing prices of 20 different models by up to 34% with other manufacturers following suit. Share values have fallen as a result.
Peter Golding, CEO at the fleet software specialist, 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, something that we highlighted a couple of years.
“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.
“The EU and US have raised tariffs on Chinese electric vehicles but the UK has resisted following suit. 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.”
Peter said that 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 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?
“What we are seeing lately in the UK are noticeable but relatively controlled EV price reductions over time and 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.”