Electric car: the price war will be formidable in 2025, Chinese manufacturers attack
From January 2025, He Xiaopeng foresees an intensification of the price war as announced in an internal letter shared by CnEVPost. XPeng Motors CEO is banking on exceptional growth in the Chinese market with insatiable domestic demand.
The war will intensify on the electricity market
However, the situation causes two problems. First, competition is fierce with more than a hundred electric vehicle manufacturers in China. The market is therefore saturated and small businesses may not survive. Second, firms anticipated by producing beyond the absorption capacity of the Chinese market. Companies want to reach other territories but are held back by countries' protectionist measures like those of the European Union.
Giants like Xiaomi have big ambitions in terms of production but this growth could therefore be slowed down. XPeng Motors is already present in 30 countries and regions with the aim of doubling its international presence by the end of 2026. The car manufacturer aims to achieve at least 50% of its sales internationally: the price war would then exceed the Chinese borders to reach the global market.
Chinese manufacturers are already developing strategies to circumvent customs barriers. Chery and SAIC are adopting the importation of vehicle kits for local assembly, therefore avoiding customs tariffs on already finished models. If prices are low enough, even countries imposing high taxes on different imports would be affected, with consumers turning to Chinese production.
But how to achieve these low prices? Several levers are possible for Chinese manufacturers: government subsidies, cost reduction measures, or even a strategy of selling at a loss to penetrate certain markets. In a rapidly changing landscape, companies from China aim to remain competitive.
The price war could impact the United States if President Donald Trump removes the $7,500 tax credit for domestically manufactured electric vehicles. The political evolution of the country would then radically change the situation for the national market.
