Tesla, Inc. (NASDAQ: TSLA), along with China’s leading electric vehicle (EV) manufacturers, including BYD Co., has made a solemn promise to uphold fair competition and steer clear of “abnormal pricing” in the world’s largest EV market. This pledge indicates a potential resolution to the price war that has plagued the industry in 2023.
The signing ceremony took place at the China Auto Forum in Shanghai, with 16 prominent carmakers coming together on stage to acknowledge and embrace the four key points outlined in the agreement. Among the notable participants were NIO Inc. (NYSE: NIO), XPeng Inc. (NYSE: XPEV), Geely, and Chery Automobile Co.
Last year, Tesla initiated the price war, prompting other major brands to follow suit with substantial discounts earlier this year as sales began to slow down. Tesla, led by the visionary Elon Musk, and BYD, China’s largest car brand, spearheaded the battle by slashing prices by an average of 6% during the first five months of the year.
The price cuts, while enticing potential buyers, sparked discontent among some customers who had already purchased vehicles. Dissatisfied Tesla owners even took their grievances to stores and distribution centers to voice their complaints.
The COVID-19 pandemic’s impact on consumer sentiment, coupled with excess inventory, created an environment conducive to aggressive discounting within the auto industry.
In response to this situation, the Ministry of Industry and Information Technology directed the China Association of Automobile Manufacturers to convene the 16 companies involved and sign this important agreement, as revealed by MIIT Minister Miao Wei at the event in Shanghai.
The car manufacturers also vowed not to mislead consumers, contribute to stable growth, and mitigate risks.
The key details of the non-binding agreement are as follows:
- Adhere to industry rules and regulations, ensuring fair competition and refraining from disrupting it through abnormal pricing.
- Adopt responsible marketing and publicity practices, refraining from exaggeration or false advertising to attract attention or acquire new customers.
- Prioritize quality, and improve lives through high-quality products and services.
- Promote core socialist values, actively fulfill social responsibilities, and undertake the crucial task of ensuring steady growth, bolstering confidence, and averting risks.
Other prominent automakers present during the ceremony were FAW Group, BAIC Group, JAC Group, Dongfeng Motor Corp., GAC Group, Li Auto, SAIC, Sinotruk, Great Wall Motor, Changan Auto, and Chery Automobile Co.
Kevin Putnam is a financial journalist and editor based in New York. He specializes in editing news and analysis related to U.S. stock market.
