Li Auto Offers Up to 23,000-Yuan Purchase Subsidy as Price War Reignited in China

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BEIJING, August 23 (TiPost)— Increasing Chinese electric vehicle (EV) makers responded to the new wave of price war, even Li Auto Inc., whose chairman and CEO Li Xiang said five months ago that his company won’t join in the price competition.

Credit：Visual China

While Li Auto hasn’t officially announced any price cuts, the Beijing-headquartered EV manufacturer launched a variety of purchase subsidies in different regions in China, such as a local subsidy of RMB10,000 for new vehicle purchase in southeastern China province Sichuan, and a subsidy of RMB8,000 in Changzhou, a city of eastern China province Jiangsu, Yicai learned from several retail stores of the company. The Chinese business and financial media outlet reported that vehicle owners in Sichuan would receive one-time cash discount of RMB5,000 for maintenance, which can be used as a purchase discount, and any subsidy in Sichuan is effectively a nationwide one since Li Auto issues purchase invoices in different localities. The report estimated the direct purchase discount would be RMB15,000 to RMB23,000 in total. It said Li Auto also provides stimulus in various forms, including giving the Nintendo Switch console as a gift and an additional vehicle reward points that can be redeemed for certain services for anyone who orders its vehicle.

Li Auto’s move is unsurprising as many peers launched their new round of price cuts in August, a typical off season in auto market. The new promotion may reflect the increasing urgency need to boost sales for automobile companies who failed to meet their targets in the first half of the year. None of ten listed Chinese automakers, including Li Auto and the leading EV manufacturer BYD, have completed half of their annual sales target in the first six months this year, according data compiled by Chinese news media outlet Cailian.

Many other auto companies have slashed prices for certain models in China. Tesla last week said it has reduced the starting prices prices for certain Model Y long-range and performance versions by RMB14,000 (US$1,935), or down 4.5% and 3.8%, in China. Following the cuts that day, two versions now cost as low as RMB299,900 and RMB349,900, respectively. That is the second direct price slash since the U.S. EV giant lowered price by up to 13% in the country on January 6.

More than ten companies announced price cuts for their EVs this month, The Paper, Chinese digital newspaper owned by the Shanghai United Media Group, estimated.

Hangzhou-headquartered Leapmotor announced price cut between RMB10,000 and RMB20,000 on August,1. Hozon Auto’s EV brand Neta Auto, or Nezha in Chinese, launched a price cut of RMB30,000 for its 2022 Neta S model, with the cheapest one now priced at RMB159,800. Changan Ford, a joint venture between state-owned Changan Automoile and U.S. giant Ford Motor Company, announced on August 1 a promotional package including one-time price cut of RMB40,000 when it completely took over Ford Mustang Mach-E operations in China. The next day, Chery rolled out a campaign in summer to cut its new energy vehicle (NEV) models by up to RMB10,000. SAIC Motor said on August 3 that it started to provide the maximum discount of RMB26,000 for four models under the MG margque. A day after SAIC’s move, Great Wall Motor’s NEV brand Haval Xiaolong launched an event at e-commerce platforms this month, which provides buyers a cash discount range between RMB2,000 and RMB8,000, along with cash vouchers worth up to RMB12,000 for certain buyers from August 5 to 26.