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Falling EV sales are leading Chinese car companies to resort to an oft-used tactic: price wars. Deliveries of electric cars in China have slowed<\/a> at the start of this year compared to the final quarter of last year, with drops hitting brands<\/a> like Nio, Li Auto, Xpeng and BYD.<\/p>\n EV giant BYD, a relentless discounter, cut the price of its cheapest car, the Seagull, by 5% on Wednesday. That follows the launch<\/a> of BYD\u2019s Yuan Plus crossover\u2014known as the Atto 3 in overseas markets\u2014with a starting price of 119,800 yuan ($16,643), 12% lower than its predecessor.<\/p>\n The Warren Buffett-backed BYD isn\u2019t the only company resorting to discounts. Xpeng said Sunday<\/a> that it will extend a 20,000 yuan ($2779) discount for its bestselling G6 SUV model till the end of March. Geely\u2019s Zeekr 001 is also about 10% cheaper, with a starting price<\/a> of 269,000 yuan ($37,371).<\/p>\n Tesla, which triggered last year\u2019s fierce price wars in China, has also rolled out incentives for March. The U.S. carmaker is offering customers an insurance subsidy if they buy the company\u2019s existing inventory of Model 3 and Model Y cars. <\/p>\n Even hybrid cars are getting discounts. BYD\u2019s newest plug-in hybid model, the Qin Plus DM-I, is priced 20% below the previous version, at 79,800 yuan ($11,086). <\/p>\n SAIC-GM-Wuling, a joint venture including General Motors and two Chinese automakers, priced<\/a> the Xingguan hybrid car at 99,800 yuan ($13,865) in February, below the 100,000 yuan threshold.<\/p>\n China has the world\u2019s largest EV market; the sector is highly competitive due to the number of brands that operate in the country. Some EV makers have turned to price wars to increase sales. BYD\u2019s aggressive discounts may have helped it unseat Tesla<\/a> as the world\u2019s biggest seller of battery electric vehicles. <\/p>\n But discounts may have an unintended effect on consumers, who are now holding off on purchases in hope of getting a further discount, according to the China Passenger Car Association. <\/p>\n Then there\u2019s the possibility that after years of strong growth and investment, the Chinese EV market may now be producing more cars than could be sold domestically. Chinese carmakers are now looking overseas for growth opportunities, yet a flood of cheap Chinese EVs could trigger retaliation in markets like the U.S.<\/a> and Europe<\/a>. China, too, is warning of overcapacity<\/a> in the domestic EV sector. <\/p>\n Tesla shares fell 2.3% in Wednesday trading after Morgan Stanley cut its price target for the EV maker, citing weakened demand for EVs in key markets like China.<\/p>\n \u201cChina EV market is over-supplied,\u201d warned analyst Adam Jonas, according to Reuters<\/a>. The analyst added that Tesla\u2019s product lineup \u201cmay be the oldest of any major OEM (original equipment manufacturer), with nearly all of its lineup launched prior to COVID.\u201d<\/p>\n Tesla is down 12.7% so far this week. On Monday, the China Passenger Car Association revealed that Tesla\u2019s sales in China fell 19% year-on-year in February. Tesla sold 60,365 China-made vehicles last month, the lowest amount the company has sold in China since December 2022. The news spurred a drop in shares that knocked CEO Elon Musk<\/a> from his position as the world\u2019s richest person, according to Bloomberg estimates.<\/p>\n Musk is now in third place<\/a>, behind LVMH CEO Bernard Arnault and Amazon founder Jeff Bezos. <\/p>\n<\/div>\n\nBad news for Tesla<\/strong><\/h2>\n