Tesla Rivals BYD, Xpeng Pledge Faster Supplier Payments Amid EV Price War In China: Report

Several Chinese automakers, including Tesla Inc. TSLA rivals BYD Co. Ltd. BYDDY BYDDF and Xpeng Inc. XPEV, have pledged to settle supplier dues within 60 days.

What Happened: Authorities in China brought in regulations in March, requiring companies to settle payments with suppliers within 60 days, which kicked into effect on June 1, Reuters reported on Wednesday.

The report suggests that China's Iron and Steel Association released a statement outlining that the price war has put tremendous pressure on the sector as payments remain unsettled for months and manufacturers ask for price cuts up to 10%.

The association also called upon the manufacturers to take inspiration from Japanese auto manufacturers who "leave a certain amount of profit for suppliers and ensure product quality and innovation," the report said.

Why It Matters: The news comes as several mainstream Chinese automakers compete in the EV price war, which has engulfed the Chinese domestic car market for a while.

Recently, the Chinese Communist Party's (CCP) newspaper, The People's Daily, voiced concerns about the ongoing "rat race" among car makers in the country while pointing out that the aggressive pricing could hurt supply chains.

The comments from the CCP come in as a BYD dealer in China's Shandong province closed down 20 outlets, citing changes to the automaker's dealership rules. The company has closed down dealerships across 4 cities.

Despite this, the EV price war shows no sign of relenting as BYD recently released the Seal 06 EV Sedan, available for $15,000. The sedan undercuts rival Tesla's cheapest offering in China, the Model 3, by almost half.

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