Price competition in electric vehicles heats up

Electric vehicle maker Nio Inc. has slashed the starting prices of all its models in China by 30,000 yuan ($4,200), days after reporting a better-than-expected loss last quarter.

In China, the world’s largest electric vehicle market, the price war is heating up to get more customers. Monday’s move gave Nio a firmer footing in competition from other electric vehicle companies, including Tesla.

On the other hand, the Chinese government has launched a campaign to encourage the adoption of clean vehicle purchases, especially in rural areas, after sales growth of electric vehicles and plug-in hybrids fell to 41 percent in the January-May period from 120 percent a year ago.

In a message shared on Nio’s app, Nio CEO William Li said, “This price adjustment has been discussed within the company for a very long time. There was a lot to think about, and even until 3 o’clock this morning, negotiations were still going on. Now is the right time for this move.”

The company said the price changes take effect immediately.

While Nio’s sales were 31 thousand 41 in the January-March period, the total sales for April and May fell below 13 thousand vehicles. The Shanghai-based company, which maintains its target of selling 250,000 electric vehicles this year, said last week that its first-quarter net loss increased to 4.74 billion yuan from 1.78 billion yuan a year ago.

Li, who founded Nio in 2014, announced in April that the company would not participate in the price war. After the discount of 30 thousand yuan, the prices of the models were as follows. Tesla has also announced a price cut before. The company, headed by Musk, reduced the Model Y long-range price by 9 percent and the Model Y performance model by 8.5 percent in April.