BEIJING (Reuters) -Chinese electric vehicle giant BYD on Wednesday added fuel to the flames of a brutal price war in China by cutting the price of its cheapest car, the Seagull, by 5%.
Sticker tags for the Seagull, a compact car, will now start at 69,800 yuan ($9,700).
BYD has become a relentless discounter in the price war Tesla (NASDAQ:TSLA) began in the world's largest auto market last year. That aggressive stance has helped it unseat its U.S. rival as the world's biggest seller of electric vehicles even if most of BYD's cars are sold in China.
This year, it has embarked on a series of price cuts - including a drop of nearly 12% to the Yuan Plus crossover, its best-selling car known as the Atto 3 in overseas markets. The price reductions have been deeper in depth than rivals and across a wider number of models.
Amid uneven growth for the world's No. 2 economy, sales (including exports) of new energy vehicles such as pure battery EVs and plug-in hybrids are expected to rise 13% to 11.5 million units this year. That's sharply slower than the 38% jump in growth for 2023.
Other automakers that have rolled out fresh price cuts this year include Tesla, Geely Auto, GAC Aion, Leapmotor and Xpeng (NYSE:XPEV).
BYD is likely to offer more discounts through 2024, said Shi Ji, a Hong Kong-based analyst with China Merchants Bank International, adding that this will pressure the brand's gross margin but the pain could be partly offset by cost cuts by suppliers.
Gross profit margins for the Warren Buffett-backed automaker have to date held up reasonably well. It logged a 22% margin in the third quarter, up from 18.7% in the second quarter, according to Reuters calculations.
BYD has also been aggressively expanding its presence overseas. It is, for example, spearheading a Chinese EV push in Australia and has begun construction for a manufacturing complex in Brazil.
($1 = 7.1978 yuan)