Tesla & Chinese EV Producers Have Reportedly Signed A Price War Truce

Electric vehicle price cuts in recent months, or perhaps the past year we could say, have been superb for customers. But they’ve apparently been a bit brutal for automakers. Reports are that this should all get easier to manage since 15 Chinese automakers and Tesla* have signed a truce ending the price war. (*The only foreigner, but it somehow seems to get embraced as a Chinese automaker since its Shanghai gigafactory was built.)

In the US or Europe, I think this would break anti-trust laws. (But I’m not a lawyer, and especially not an anti-trust lawyer, so don’t quote me on that.) However, it’s apparently fine in China, and perhaps even welcomed by the powers that be. In fact, there was reportedly even a signing ceremony for this truce. Notable auto giants like BYD and Geely signed the truce, as did pure-EV startups like XPeng, NIO, and Tesla (but I guess we probably can’t call Tesla a startup any more).

So, how will all of these automakers stimulate more sales if not through price cuts? Through new models and simply good marketing (but not misleading marketing). Though, I have to wonder if the truce is not a marketing effort itself. It seems that many Chinese customers have gotten spoiled by cost cuts and expect them so much that they refrain from buying until a new round of cuts comes about. Perhaps this rather public truce was also about telling customers: “hey, these are the prices you have to pay, and we’re not cutting them further, so don’t wait around and delay your purchases any longer.”

Here are detailed commitments from the new Chinese EV truce, which go beyond a key element of stopping the price war:

• Adhere to industry rules and regulations, regulate marketing activities, maintain fair competition, and not disrupt fair competition with abnormal pricing.
• Pay attention to marketing and publicity methods, not exaggerate or use false publicity to attract attention or gain new customers.
• Put quality first; improve lives with high-quality products and services.
• Promote core socialist values, actively fulfill social responsibilities, and take on the heavy responsibility of maintaining steady growth, strengthening confidence, and preventing risks.

Seems reasonable. What are your thoughts?

Here’s the full list of the 17 automakers that signed onto the agreement:

1. BAIC
2. BYD
3. Chery
4. Chongqing Changan Automobile
5. Dongfeng Motor
6. FAW
7. GAC
8. Geely
9. Great Wall Motor
10. JAC Motors
11. Li Auto
12. NIO
13. SAIC
14. Sinotruk
15. Tesla
16. XPeng

Featured image courtesy of XPeng