China’s Li Auto is offering an up to RMB 16,000 ($2,194) discount for its vehicle lineup as well as an interest-free loan to prevent potential customers from flocking to competitors’ products, after the electric vehicle maker posted disappointing delivery figures for February.
Why it matters: The move is the latest example of how automakers in China have become entangled in an ongoing competition for market share while their prices are pressured by slowing demand.
- It also comes as larger rival BYD and peers Xpeng Motors and Leapmotor have bucked the trend with a solid increase in February sales, signaling a change in the competitive industry.
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Details: Li Auto said (in Chinese) on Feb. 28 that its L9 full-size sports utility vehicle, which initially had a starting price of RMB 409,800 last year, is now listed for RMB 16,000 less than it was by the end of March. Customers will also be relieved from paying additional costs of RMB 20,000 thanks to a three-year and 0% interest financing deal, according to an announcement from the company.
- The smaller L8 and L7 now go for RMB 309,800 and RMB 289,800, respectively, representing a 4% discount. The most affordable L6 crossover now costs RMB 239,800, more than RMB 20,000 cheaper than Tesla’s Model Y, and the new 0% financing is set to allow buyers to save RMB 10,000 in interest payments over the next three years, according to the firm.
- The big incentives took place one day ahead of Li Auto’s announcement that it delivered 26,263 vehicles to owners in February, representing a year-on-year increase of 30% but a 12.2% decline from a month earlier. The company had cut the prices of four of its five models by between 4.3% and 5.7% last April.
- By comparison, Xpeng posted deliveries of more than 30,000 cars for the fourth consecutive month, while the February deliveries of Leapmotor, often considered a cheaper alternative to Li Auto, surged by 285% from last year and slightly increased from January to 25,287 units.
- Nasdaq and Hong Kong-listed Li Auto is expected to benefit from a strong product cycle this year with its first all-electric SUV, the i8, set to be released in July at a price tag of about RMB 350,000. The company also plans to launch refreshed versions of its existing vehicles in May, featuring an updated advanced driver assistance system.
Context: China’s passenger vehicle sales are expected to have reached 1.25 million units in February, representing a year-on-year growth of 13.6% and a month-on-month decline of 30.3%, according to the estimates compiled by the China Passenger Car Association.
- At least half of these sales, or 600,000 units, could be new energy vehicles (NEVs), including all-electrics and plug-in hybrids, as the market is showing a speedy recovery following the Chinese New Year holiday, which ended on Feb. 4, the industry group said.
- BYD said it sold 318,233 passenger EVs in February, marking a 161.4% annual increase and a 7.3% rise from a month earlier. However, sales of Huawei’s Harmony Intelligent Mobility Alliance (HIMA) plunged by 38.5% to 21,517 units last month from January.
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