Chinese Electric Cars Use Aggressive Pricing to Undercut Tesla

(Bloomberg) -- Chinese electric-car makers are trying to give Tesla Inc. a run for its money, launching models in their home market with aggressive prices meant to undercut the U.S. marque that’s become the sales leader.

NIO Inc. said Friday its new EC6 compact SUV will start at 368,000 yuan ($52,500), which is about 25% lower than the tentative price of Tesla’s direct rival, the Model Y. Xpeng Motors’ P7 sedan goes head-to-head with Tesla’s Model 3 -- and costs less even with a significantly longer driving range in a variant slated to come out in September.

Tesla has quickly grabbed a commanding lead in the world’s largest electric-vehicle market since starting production in Shanghai last year, but it’s early days for the EV industry and some local brands are seeing sales pick up. While Tesla is pushing to bring its prices down, Chinese contenders with more localized supply chains have the advantage in courting cost-conscious buyers.

When unveiling the EC6 in December, NIO founder William Li said his company would take Tesla’s Model Y into consideration when setting the price. Deliveries of the EC6 are set to start in September, NIO said Friday.

The Model Y currently is being built only in the U.S., and it sells in the country for a starting price of $49,990. Tesla’s China website shows a tentative price of 488,000 yuan for the compact SUV, without specifying whether that is the U.S.-built version or the variant to be assembled in China, with deliveries expected to start in 2021.

Shares of NIO have more than tripled this year, after the once cash-strapped company secured a $1 billion investment from a local government and a $1.5 billion credit line from six Chinese banks. The company sold 14,169 cars in the first half of 2020. Tesla, whose shares likewise have more than tripled in 2020, saw registrations of its vehicles top 50,000 in China in the first half.

Xpeng, which raised $500 million this month, recently started deliveries of the first variant of the P7 sedan. The version available in September has a range of as long as 706 kilometers (439 miles) on one charge and starts at 279,650 yuan before subsidies. Tesla’s Model 3 starts at 291,800 yuan before subsidies.

Global car giants also are intensifying their efforts to sell EVs in China. BMW AG this month rolled out the China-built iX3 SUV in its most serious push into the segment since debuting its i3 electric model seven years ago.

©2020 Bloomberg L.P.

With assistance from Bloomberg