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BEIJING (Reuters) – U.S. automaker Tesla (NASDAQ:TSLA) sold 84,159 China-made electric vehicles (EVs) in August, a 9.3% rise from a year earlier, data from the China Passenger Car Association (CPCA) showed on Monday.
Sales of China-made Model 3 and Model Y cars rose 30.9% from a month earlier.
Chinese rival BYD (SZ:002594), with its Dynasty and Ocean series of EVs and petrol-electric hybrid models, recorded deliveries of 274,086 passenger vehicles in August, a jump of 57.5% on the year.
Tesla started a price war in the world’s largest auto market at the start of 2023 to defend its market share, which has come under pressure from chief local rival BYD and smaller players.
Its moves included slashing prices in China twice in three days in August and announcing additional cuts on Friday, adding to its July cash rebates and stoking a price war that has drawn in 40-plus brands in China.
With sales being prioritised, Tesla’s profit margin has taken a hit. Its gross margin from automotive sales plunged to 17.9% in the first half from 27.8% in the year-earlier period, Reuters’ calculations showed.
By contrast, BYD’s latest financial disclosure showed its automotive gross margin rose to 20.67% in the six months ended June, an increase of 4.36 percentage points from the year before. Citi analysts said this was helped by the automaker’s “scale production advantages”.
On Friday, however, Tesla released a refreshed version of its Model 3 vehicle first in China, with a starting price 12% higher than the previous, base rear-wheel drive model.
Other makers including smaller rival Xpeng (NYSE:XPEV) and newcomer Xiaomi (OTC:XIACF), are looking to announce even more affordable models, intensifying competition.
Xpeng will launch an A-class model priced in the 150,000 yuan ($20,571.62) segment under a project called MONA as part of a late August deal to acquire ride-hailing giant Didi’s smart EV unit. Xpeng’s current models are mostly priced above 200,000 yuan.
Xiaomi, beginning life as a budget phone maker, has also won the nod from China’s state planner to make EVs.
Adding to the challenges were falling car sales, despite a raft of measures to underpin big-ticket spending, as China’s post-pandemic economic recovery falters, with major banks flagging the risk of China missing its 2023 growth target of around 5%.
($1 = 7.2916 Chinese yuan renminbi)
