Major automakers are stepping up their efforts to compete for market share as the new energy vehicle market matures. In 2023, BYD conducted its first price cut, especially for Dynasty series automobiles, in this cutthroat market. The 2021 Han EV’s price was dropped by 20,000 Yuan, the 2021 Qin EV’s price was reduced by 15,000 Yuan, and the discount range for the new model was typically between 6,000 and 8,000 Yuan. The price cut is currently visible in Beijing and Shanghai; the precise city in the future is uncertain. Examining the market environment, competition, regulatory backing, consumer demand, and other aspects in relation to the price drop made by BYD.
First, market environment
At the moment, the growth rate of the new energy car market is gradually slowing. According to the China Association of Automobile Manufacturers, sales of new energy cars in China will reach 6.887 million units in 2022, a 93.4 percent increase year on year. At the same time, as the new energy vehicle subsidy policy is gradually phased out, the prices of new energy vehicles are no longer as attractive, and consumer enthusiasm for purchasing new energy vehicles is waning. In such a market, BYD was forced to reduce prices in order to stimulate demand and maintain sales growth.
Second, competitors
BYD has many rivals in the market for new energy vehicles, including Tesla, NIO, and Xiaopeng. These companies frequently release new items and reduce prices in an effort to fight for market share. But compared to Tesla and other companies, BYD has a poor brand awareness and market share in the area of new energy cars. BYD needs to strengthen its competitiveness as a result. Price reduction is a successful strategy for gaining more customers and expanding market share.
Third, policy support
Policy is an important factor in promoting the development of the new energy vehicle market. As a result of national policies, new energy vehicles have advanced significantly. However, as the policy is phased out gradually, the cost of new energy vehicles has risen. The government has also implemented a number of measures to stimulate market demand, such as lowering the purchase tax and increasing the proportion of new energy vehicles on the road. The implementation of these policies has aided the development of the new energy vehicle market and provided additional opportunities for BYD and other enterprises.
Fourth, consumer demand
Consumer demand is one of the key forces influencing the new energy vehicle market. Due to the attractiveness of these vehicles, consumer demand for new energy vehicles is currently increasing. Although some consumers find it difficult to accept, the cost of new energy vehicles remains high, BYD’s mainstream models are still available, and fewer people are purchasing automobiles in-store. Under such conditions, BYD employs a price reduction strategy in order to better match customer demand, increase consumer readiness to purchase new energy vehicles, and increase market share.
To summarize, the reasons for BYD’s price cut are primarily the market environment, competitors, policy support, consumer demand, and other factors.
In order to handle market changes, increase market share, raise brand recognition, and remain competitive under the pressure of market rivalry, BYD must adopt more adaptable strategies. The demand for new energy vehicles will also progressively climb as the market for them continues to develop, therefore businesses must constantly launch more high-quality goods and services in order to satisfy consumer demand.