Hong Kong
CNN
—
As profit margins get squeezed, temperatures are rising in the world’s biggest car market.
A tense exchange between two major Chinese electric vehicle (EV) manufacturers in recent days highlights the pressures they face as a price war in the industry intensifies.
It all started on Saturday, when Yu Chengdong, the chairman of Huawei’s smart car unit, implied that rival EV maker BYD is racing ahead because of low prices rather than the quality of its cars.
“Currently, BYD is … number one in the rat race, because it has extremely low costs,” he said at a public forum in Shenzhen.
BYD, a carmaker Elon Musk once laughed at, overtook his Tesla (TSLA) at the end of last year as the biggest seller of electric vehicles on the planet.
“We are not good at competing with ultra-low prices. Rather, we are good at competing with value, intelligence, luxury, comfort, safety, high quality, excellent and comfortable user experience,” Yu added.
While top executives from the EV industry often post on social media about a range of topics, including technology and advertising, they rarely name rival companies, especially when criticizing them.
In recent months, a price war has escalated in China’s hyper-competitive EV industry, with manufacturers battling for consumer attention with deep discounts or newer, cheaper models.
The industry suffered a blow in May when US President Joe Biden quadrupled tariffs on electric vehicles from China to 100%, effectively sealing off one of the world’s biggest passenger car markets. It also faces potential extra import duties from the European Union as soon as next week.
Yu’s comments about BYD have gone viral on Chinese social media and provoked a sharp retort from the EV giant.
“Personally I have great respect for Huawei. But I feel that if Mr Yu can make fewer comparisons, either at press conferences or public forums, more people will like him, and Huawei’s brand would also gain points,” Li Yunfei, general manager of branding and public relations at BYD, said in a video post on Weibo on Thursday.
