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On May 3, 2024, a large crowd gathered to see BYD’s electric car at the Beijing Motor Show.
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Temperatures are rising in the world’s largest auto market as profit margins get squeezed.
Tense exchanges between two Chinese electric vehicle giants (EV) manufacturers have recently highlighted the pressures they face amid intensifying price competition within the industry.
How it all began Saturday, Yu Chengdong, chairman of Huawei’s smart car division, suggested rival EV maker BYD’s lead was due to lower prices. Its quality car.
“BYD is currently ahead of the competition because our costs are extremely low,” he said at a public forum in Shenzhen.
BYD, the automaker once mocked by Elon Musk, overtook Musk’s Tesla (TSLA) late last year to become the world’s largest seller of electric vehicles. (Tesla reclaimed the title in the first quarter of this year, but the gap is still narrow.)
“We are not good at competing on ultra-low prices. Rather, we are good at competing on value, intelligence, luxury, comfort, safety, high quality and a superior and pleasant user experience,” Yu added.
Top EV executives frequently post on social media about a variety of topics, including technology and advertising, but they rarely name rivals in their specific criticisms.
Price wars have intensified in China’s crowded EV industry in recent months, with manufacturers vying for consumer attention with deep discounts and newer, cheaper models.
The auto industry was hit hard in May when U.S. President Joe Biden quadrupled tariffs on electric vehicles from China to 100%, effectively shutting down one of the world’s largest passenger vehicle markets. Additional import tariffs could come from the European Union as soon as next week.
Yu’s comments about BYD went viral on Chinese social media, drawing a harsh rebuttal from the EV giant.
“I personally have a lot of respect for Huawei. But I believe if Yu refrains from making comparisons at press conferences and public forums, more people will like him and the Huawei brand will be more respected,” Li Yunfei, BYD’s general manager of brand and public relations, said in a video post on Weibo on Thursday.
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Huawei’s electric vehicle “AITO M9” was exhibited in Shanghai on May 19, 2024.
Li also noted that Huawei has made significant price cuts over the past year in an attempt to “compete on low prices.”
“We welcome other brands to display their cars at our booth and compete with us on the same stage,” he added.
On the same day, BYD founder and chairman Wang Chuanfu said at the company’s annual shareholders’ meeting that the company’s core strengths lie in “technology and innovation.”
Wang added that in the future, BYD will focus on generative artificial intelligence and large-scale model technology and invest 100 billion yuan ($13.8 billion) in developing smart EVs.
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Earlier this week, BYD became one of nine automakers to receive permission from the Chinese government to conduct public tests of advanced autonomous driving.
Competition is fierce in the world’s largest EV market, with more than 200 domestic EV makers struggling with a massive oversupply and slowing consumer demand.
Last year saw a fierce price war erupt, with even market leaders like BYD and Tesla rushing to slash prices to maintain or expand their market positions.
Deep price cuts by manufacturers and government subsidies for car buyers boosted sales volumes but reduced overall profitability.
Earlier this year, Wang said the industry was facing a “brutal round of elimination” and urged companies to build economies of scale and brand advantages “as quickly as possible.”
