{"id":10651,"date":"2023-05-18T19:34:38","date_gmt":"2023-05-18T23:34:38","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/tesla-ev-peer-byd-cut-prices-again-chinese-demand-isnt-a-problem\/"},"modified":"2023-05-18T19:34:39","modified_gmt":"2023-05-18T23:34:39","slug":"tesla-ev-peer-byd-cut-prices-again-chinese-demand-isnt-a-problem","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10651","title":{"rendered":"Tesla EV Peer BYD Cut Prices Again. Chinese Demand Isn&#8217;t a Problem."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000649621\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>\n        Tesla<span>,<\/span><br \/>\n       the global leader in battery-electric vehicles, cut prices in the first quarter. Now<br \/>\n        BYD<span>,<\/span><br \/>\n       the EV leader in China, is doing the same in the second quarter. That makes investors nervous, but there is logic bethind the car makers\u2019 moves.  <\/p>\n<p>Thursday, Citi analyst Jeff Chung pointed out that BYD (ticker: 1211.Hong Kong) has cut prices on its  Han plug-in hybrid vehicles. It\u2019s the second cut in the past \u201c210 hours,\u201d wrote Chung.<\/p>\n<div class=\"paywall\">\n<p>About a week ago, BYD also cut prices for its Seal battery-electric vehicle. Cuts, depending on the version, ranged from roughly 3% to 10%. The Seal now starts at about $28,000. A Tesla (TSLA) Model 3 in China starts at about $34,000. <\/p>\n<p>Price cuts can signal trouble in a market, but there doesn\u2019t appear to be an issue with demand. For the year to date through the end of April, new-energy vehicle sales in China, which includes both battery-electric and plug-in hybrid vehicles, rose 43% year over year to 2.1 million units, according to China Passenger Car Association data. During that time, battery-electric-vehicle sales rose 29% to 1.5 million units, and plug-in hybrid sales rose 100% to 600,000 units.<\/p>\n<p>Those numbers might be a little inflated. Chung, in a separate report, wrote that auto makers likely included some early May sales in April numbers. Still, he is expecting a strong year for EV sales in China, with unit sales up roughly 30% year over year. <\/p>\n<p>Instead of reacting to changes in demand, BYD might just might be feeling pressure to match Tesla\u2019s price cuts, which accelerated in January. BYD didn\u2019t immediately respond to a request for comment about pricing.<\/p>\n<p>Tesla\u2019s price cuts worked. It picked up market share in China in the first quarter, increasing sales volume by almost 30% year over year, faster than the market grew. That share didn\u2019t come at the expense of BYD, though; its first-quarter battery-electric sales rose by 85%. <\/p>\n<p>Cutting prices is a risky way to  gain market share. If all companies making a profit drops prices to match, market shares don\u2019t change much, and everyone is worse off\u2014except consumers.<\/p>\n<p>The effect right now is that BYD and Tesla\u2014the only two EV makers globally producing consistent profits\u2014are pressuring Chinese EV peers. Price cuts eat into profits, but the two have more room to cut than others.<\/p>\n<p>\u201cAggressive price cuts by Tesla was a smart \u2018rip the band-aid off moment\u2019 for Musk &amp; Co. to defend its EV turf and put an iron fence around its consumer installed base,\u201d wrote Wedbush analyst Dan Ives in a Thursday report. The same logic applies to BYD. <\/p>\n<p>\u201cPrice cuts come at a price, and this tug of war between volumes and margins is now the big debate on the Street heading into earnings and the rest of 2023,\u201d Ives wrote. He rates Tesla shares at Buy and has a target of $215 for the price. <\/p>\n<p>Investors were shaken by Tesla\u2019s first-quarter profit margins following its cuts. Tesla reported first-quarter operating-profit margin of about 11%, down from about 19% a year ago. Shares fell almost 10% in response.<\/p>\n<p>Tesla stock was up 0.8% in late trading Thursday at $175.25. The<br \/>\n        S&amp;P 500<br \/>\n       and<br \/>\n        Nasdaq Composite<br \/>\n       were up 0.4% and 0.9%, respectively. BYD\u2019s American depositary receipts slipped 0.4%. <\/p>\n<p>BYD\u2019s Hong Kong-listed shares rose 1.8% Thursday. The<br \/>\n        Hang Seng Index<br \/>\n       added 0.9%.<\/p>\n<p>Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/tesla-ev-stock-byd-cut-prices-2515908b?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tesla, the global leader in battery-electric vehicles, cut prices in the first quarter. Now BYD, the EV leader in China, is doing the same in the second quarter. That makes investors nervous, but there is logic bethind the car makers\u2019 moves. Thursday, Citi analyst Jeff Chung pointed out that BYD (ticker: 1211.Hong Kong) has cut [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10652,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-10651","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tesla EV Peer BYD Cut Prices Again. Chinese Demand Isn&#039;t a Problem. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Tesla, the global leader in battery-electric vehicles, cut prices in the first quarter. 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