As profit margins are squeezed, temperatures are rising in the world’s largest car market.
A tense exchange between two greats Chinese electric vehicle Electric vehicle (EV) manufacturers have in recent days highlighted the pressures they face as the industry’s price war intensifies.
It all started on Saturday when Yu Chengdong, president of Huawei’s smart car unit, hinted that rival electric vehicle maker BYD is ahead because of low prices rather than the quality of its cars.
“Currently, BYD is… number one in the rat race because it has extremely low costs,” he said at a public forum in Shenzhen.
BYD, an automaker that Elon Musk once laughed at, has surpassed his Tesla (TSLA) at the end of last year as the largest seller of electric vehicles on the planet. (Tesla regained its position in the first quarter of this year, but they are side by side.)
“We are not good at competing with ultra-low prices. Instead, we are good at competing on value, intelligence, luxury, comfort, security, high quality, excellent and comfortable user experience,” Yu added.
While top executives in the electric vehicle industry frequently post on social media about a range of topics, including technology and advertising, they rarely name rival companies, especially when criticizing them.
In recent months, a price war climbed in China’s hyper-competitive electric vehicle industry, with manufacturers fighting for consumer attention with deep discounts or newer, cheaper models.
The industry was dealt a blow in May when US President Joe Biden quadruple fares in China’s electric vehicles to 100%, effectively isolating one of the world’s largest passenger car markets. It also faces potential additional import duties from the European Union as early as next week.
Yu’s comments about BYD went viral on Chinese social media and prompted a scathing response from the electric vehicle giant.
“Personally, I have great respect for Huawei. But I feel that if Yu can make fewer comparisons, whether at press conferences or public forums, more people will like him, and Huawei’s brand would also gain points,” said Li Yunfei, general manager of branding and public relations at BYD, in a video post on Weibo On thursday.
Li highlighted that Huawei is also trying to “compete on low prices” as the company made significant price cuts last year.
“We welcome other brands to showcase their cars at our booth and compete with ours on the same stage,” he added.
On the same day, Wang Chuanfu, founder and chairman of BYD, said at the company’s annual shareholder meeting that its main strength lies in “technology and innovation”.
BYD will invest 100 billion yuan ($13.8 billion) in developing smart electric vehicles in the future, focusing on generative artificial intelligence and large model technologies, Wang added.
Earlier this week, BYD was among a group of nine automakers that received the green light from the Chinese government for public testing of advanced automotive driving.
Competition in the world’s largest electric vehicle market has become fierce. The country has more than 200 electric vehicle manufacturers who are facing a huge oversupply and slowing consumer demand.
A brutal price war began last year, with even market leaders like BYD and Tesla rushing to cut prices to maintain or expand their market positions.
While deep price cuts by manufacturers and government subsidies to car buyers have boosted sales volume, overall profitability has fallen.
Wang he said earlier this year that a “brutal elimination round” is coming to the industry, urging companies to create economies of scale and brand advantages “as quickly as possible”.
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