Chinese automaker BYD Co (OTC:BYDDY) cut the starting price of its best-selling Seal sedan by 10% on Wednesday as the electric vehicle maker aims to extend its lead in the world's largest auto market.
The new price for the vehicle is now 18% cheaper than the rear-wheel drive Model 3 made by the company’s closest competitor, Tesla (NASDAQ:TSLA).
China's EV market is in the midst of a price war started by Tesla earlier this year, with several EV makers including BYD following the U.S. automaker's example by cutting prices for best-selling models this year to defend market share.
"Loss making independent (new energy vehicle) producers are likely to resist further price competitions, but we believe profitable market leaders such as Tesla and BYD still have the pricing flexibility to balance demand and supply - and both companies will continue to expand production capacity aggressively in 2023," Fitch Ratings analysts said in a note on Tuesday.
The company replaced its line-up of the model with five new versions, including a rear-wheel drive Seal Champion Edition with a starting price of 189,800 yuan (CNY 1 = $0.1442). With a 550-km (342-mile) driving range on a full charge, the Seal Champion Edition is 20,000 yuan cheaper than a previous version with the same driving range, according to BYD's website.
According to data collected by the China Passenger Car Association, BYD sold 19,573 Seal cars in the first quarter, while China sales of the Model 3 totaled 42,782 units in the same period.
BYD has so far led the new energy vehicle (NEV) market with its various offerings. At the recent Shanghai auto show, BYD made headlines by unveiling an electric hatchback costing half the price of the cheapest NEVs available elsewhere.
The company has outgrown Germany's Volkswagen (ETR:VOWG_p) as the best-selling passenger vehicle brand in China in the last two quarters. However, signs of weakening demand have surfaced as BYD reduced shifts at two of its auto assembly plants in recent weeks.
Shares of TSLA are down 0.76% in afternoon trading on Wednesday.