China’s Carmakers Shift Price War Tactics With Low Launch Prices
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Under pressure from regulators to curb "excessive competition," automakers are setting low prices for new models from day one.
Chinese automakers are shifting their price war tactics, moving from frequent postlaunch discounts to aggressively low initial pricing for new models amid regulatory pressure to curb “excessive competition.”
In recent months, multiple brands have launched new vehicles at prices that undercut expectations and even their own existing product lines. Nio Inc.’s Onvo brand, for example, launched its L90 model in July with a battery-leasing option starting at just 179,800 yuan ($24,800), far below market forecasts. In September, BYD Co. Ltd.’s Fangchengbao brand followed suit, pricing its new Tai 7 SUV at the same starting price.
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- Chinese automakers now launch new models at low initial prices instead of frequent postlaunch discounts, responding to government pressure against “excessive competition.”
- Average profit per vehicle in China fell from over 20,000 yuan pre-2023 to 15,000 yuan in 2024 and early 2025; sales revenue grew just 0.8% despite an 11% rise in sales volume.
- Price reductions are expected to continue due to low technological barriers and high consumer price sensitivity, even as recent price cuts have moderated.
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Who’s Who
- Nio Inc.
- Nio Inc.'s Onvo brand has launched its L90 model with a battery-leasing option starting at 179,800 yuan ($24,800), a price significantly lower than market forecasts. This strategy reflects a shift in Chinese automakers' pricing tactics towards aggressively low initial pricing for new models, aiming to bake in discounts from the start. The L90 has seen strong sales, exceeding 10,000 units in both August and September.
- BYD Co.Ltd.
- BYD Co.Ltd. is a Chinese automaker mentioned for its aggressive pricing strategy. Its Fangchengbao brand launched the Tai 7 SUV at 179,800 yuan, matching Nio's Onvo brand. This reflects a trend among Chinese automakers to offer aggressively low initial pricing for new models due to regulatory pressure against "excessive competition" and the ongoing price war.
- Li Auto Inc.
- Li Auto Inc. has adopted a strategy of aggressive initial pricing for new models. For instance, their second pure-electric model, the i8, was priced at 339,800 yuan, which is 40,000 yuan cheaper than the top-trim L8 extended-range hybrid, despite having similar configurations. This approach allows them to incorporate discounts from the outset, navigating regulatory pressure against frequent post-launch price adjustments.
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What Happened When
- Before 2023：
- The average profit per vehicle in China was above 20,000 yuan.
- Early 2023：
- The auto industry price war begins, leading to squeezed profitability and scrutiny from Beijing.
- 2023：
- Average profit per vehicle in China fell to 17,000 yuan.
- 2024：
- Average profit per vehicle in China further declined to 15,000 yuan.
- First half of 2025：
- Passenger car sales volume grew 11% year-on-year, while sales revenue rose just 0.8%. Average passenger car prices fell by 2.8%–5.6%.
- First eight months of 2025：
- Average profit per vehicle remained at 15,000 yuan.
- Late May 2025：
- China’s Ministry of Industry and Information Technology vowed to crack down on 'excessive competition.'
- July 2025：
- Nio Inc.'s Onvo brand launches the L90 model with aggressive initial pricing.
- August 2025：
- Li Auto launches the i8 model with pricing significantly below its comparable L8 model.
- August 2025：
- Onvo's L90 sells more than 10,000 units in the month.
- September 2025：
- BYD's Fangchengbao brand launches the Tai 7 SUV with aggressive pricing; Onvo's L90 sells more than 10,000 units again.
- First 30 days after September 2025 launch：
- Fangchengbao's Tai 7 delivers over 11,000 units.
- Oct. 12, 2025：
- Cui Dongshu comments that price cuts have become 'relatively moderate' in 2025 due to a government trade-in policy.
AI generated, for reference only
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