NDRC: Oversupply and others led to the price drop of new energy vehicles in Shenzhen

The Price Monitoring Center of the National Development and Reform Commission of China pointed out that the prices of new energy vehicles in Shenzhen generally fell this year, with a general decline of about 5% to 10%, led by BYD (01211); the price decline is mainly due to the oversupply of the market, the reduction of battery costs, and the advantages of scale and the whole industrial chain.

The survey and inspection results of the auto market in Shenzhen released by the NDRC show that since this year, 10 new energy vehicles monitored in Shenzhen have experienced price declines. The model with the largest decline is the Song PLUS new energy (DM-i 110KM flagship) of BYD, and the price has dropped from 154,800 yuan at the beginning of the year to 139,800 yuan (RMB • the same below), a decrease of 9.69%; the price decline of a D9 model of DENZA, a joint venture brand under BYD, has also reached 7.15% since this year.

The price of Tesla China’s Model 3 in Shenzhen has dropped by 5.93%, and Model Y has dropped by 0.9%.

The center pointed out that from the supply side, the output of new energy vehicles in China in 2023 was 9.443 million vehicles, increasing by 30% annually. Industry data shows that only the planned delivery volume of BYD, the WEY series under Huawei, and Li Auto (02015) in 2024 will increase by 2.3 million vehicles, while the forecast of market demand only has an increase of 2.1 million vehicles. The market will be in a long-term state of supply exceeding demand. In addition, the reduction of battery costs, and the cost advantages of some car companies having the integrated advantage of the whole industrial chain and the scale effect have driven the price down.

The center expects that the competition of new energy vehicles in 2024 will be extremely fierce; the price war may unfold in various forms, including price reduction promotions and positioning downgrades.

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