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Nio will not follow suit with downgrading or offering less benefits for buyers of various versions of ET5, the mid-size smart electric sedan, and we believe that the current wave of price cuts that comes fiercely will recede quickly, Pu Yang, the assistant vice president of sales and operations at Nio, commented on the recent massive price reductions by BMW, Mercedes-Benz, Audi and other auto brands for of their flagship models in an interview, the state-run national newspaper China Securities Journal reported on Tuesday.

In Pu’s opinion, the wave of price cuts is an inevitable development when the competition between the electric vehicle and the internal combustion engine vehicle, or ICE, become mature. In China, for an instance, it is natural for ICE makers to slash prices to win their market share as the passenger vehicle market saw a year-over-year (YoY) decline in the start of the year. To some extent, the new round of cuts could be a catalyst for the new energy vehicle (NEV) sector in China to boost transition from the gasoline car to the electric one, Pu said.

Pu made it clear his company will follow its own strategy to seek a larger market share through direct marketing ways, operations with more efficiency, and operating in a Delicacy Management way on gross profit, so as to provide users the highly competitive product with high cost-effectiveness. He said the electric vehicle company would launch 8 new models this year and increase investment in the power swap station, which is a means by which Nio believes it can really speed up the cyclical transition and survive in the long cycle when consumers are changing their conception under the current economic environment. In the second half of this year, the electric vehicle market, especially the luxury electric vehicle market, will grow bigger and NIO will maintain a penetration rate of about 60% in the market of premium pure electric vehicles priced more than RMB300,000, and has confidence to make the rate a record high this year, according to Pu.

Pu’s remark came as more and more Chinese automakers engaged in a price war ignited by Tesla. The U.S. electric vehicle giant reduced price by up to 13% in China on January 6. The starting price of Model Y and Model 3 sold in China accordingly were down to new low, about 43% and 30% cheaper than those on sale in U.S. Later that month, Seres Group announced to trim prices by RMB 30,000 for two SUV EV models co-developed with Huawei. Xpeng announced to offer a new round of price cuts between RMB20,000to RMB36,000 for three EV models.

In the beginning of February, Nio was reported to offer massive price cuts up to RMB100,000 for versions of ES6 and ES8 updated in 2022. Nio is near to update its 2022 versions of ES6, ES8 and EC6, and buyers of these models in stock and on display at the exhibition, though a small number, can enjoy special promotions for vehicles at the auto show under the company’s policy, an official at the EV manufacturer later clarified.

Recently, the promotion is further extending beyond the electric vehicle sector. Earlier this month, auto manufacturers based in Hubei province in central China launched a new wave of high-profile price war. The local government subsidies along with of discounts from the state-backed Dongfeng Motor Group have trimmed prices of a wide range of cars produced by seven Dongfeng joint ventures down by up to RMB90,000. Chang'an Automobile Co., Ltd. later unveiled a promotion campaign worth of RMB10 billion, allowing buyers of the latest version of CS75 Bluewhale to enjoy a comprehensive discount of RMB40,000. Another state-owned automaker FAW Group rolled out RMB100 million RMB worth of subsidies in the Jilin Province throughout the March month, with a discount range from from RMB5,000 to RMB37,000. Chery Automobile Co. Ltd., announced at last weekend a promotion with the same worth as Chang'an. Vehicles under Chery brand were cut by up to RMB31,000, while pricing of the Jetour was lowered as much as RMB42,888.

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