At the end of last year, the introduction of a vehicle trade-in policy significantly boosted sales for numerous new energy vehicle (NEV) companies in ChinaHowever, this surge in last-year's sales led to a noticeable variance in performance at the beginning of this yearJanuary's figures revealed a mixed bag for NEV manufacturers, as demand fluctuated across different pricing segments.

According to the China Passenger Car Association (CPCA), retail sales of NEV passenger vehicles reached 744,000 units in January, marking a 10.5% year-on-year increase; however, this represented a steep decline of 42.9% compared to DecemberThis reversal can be attributed to various market dynamics, including overstocking and the seasonal nature of car purchases.

Diving deeper into the statistics, the sales performance within differing price brackets showed marked differentiationChen Shi-hua, Vice Secretary-General of the China Association of Automobile Manufacturers, pointed out that in January, sales of NEVs priced between 200,000 to 250,000 yuan and 300,000 to 500,000 yuan experienced year-on-year declinesIn contrast, other price ranges showed positive growthThe most prevalent sales segment remained those vehicles priced between 150,000 and 200,000 yuan, which recorded total sales of 224,000 units, reflecting a robust year-on-year growth of 21.4%.

The January retail sales ranking highlighted stark competition among NEV manufacturersBYD maintained its leading position with impressive monthly sales of approximately 200,000 units, followed by Geely with 118,000 unitsOther notable players in the top rankings included Chang’an, SAIC-GM-Wuling, and Hongmeng ZhixingThe top ten also featured international competitors such as Tesla China, Li Auto, Xpeng Motors, Chery, and Leap Motor.

In a broad overview, companies like Xpeng, Li Auto, and Leap Motor exhibited strong performance compared to prior year indicatorsNotably, BYD, Chang’an, Tesla China, and Li Auto faced year-on-year sales drops, with Tesla China showing the largest decline of 15.5%. This was partly due to Tesla halting production of certain Model Y lines for upgrades during the Chinese New Year, resulting in reduced deliveries

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Furthermore, the intensifying competition in the NEV sector, particularly with the entrance of new players like Xiaomi, has escalated the market rivalry in the compact car segment, prompting Tesla to initiate a price-cutting strategyBetween February 5 and February 28, Tesla is offering an 8,000 yuan insurance subsidy on all Model 3 vehicles, alongside a zero-interest financing plan and exclusive charging perks, representing the most substantial discount package ever for the Model 3.

Comparing to ranks from December, significant shifts in brand standing were observedGreat Wall Motors and GAC AION dropped out of the top ten list, making way for newcomers like Xpeng Motors and Hongmeng ZhixingNotably, Hongmeng Zhixing jumped to fifth place, overtaking CheryMeanwhile, BYD and Geely held their positions steady, whereas SAIC-GM-Wuling slid from third to fourth place, replaced by Chang’anTesla slipped out of the top five positions.

GAC AION's struggles stemmed from their dependence on the B2B ride-hailing sector, which encountered increased market pressuresAdditionally, their key products—AION S and AION Y—found themselves in fiercely competitive price points, resulting in fluctuating salesGreat Wall Motors, known for its slower transition to electrification, has faced challenges with its ORA brand strategy and the pace of product launchHowever, there have been emerging signs of revitalization with the recent introduction of new models by their Wei brand, showing increased order volumes.

The landscape among emerging automakers is evolvingXpeng Motors experienced substantial sales boosts following the launch of its MONA M03 and P7+ models, achieving over 30,000 deliveries in JanuaryAnalysts believe that the P7+ offers a pricing advantage compared to similarly configured models, while the MONA M03 has carved out a niche in the 100,000 to 150,000 yuan intelligent driving market.

Furthermore, a research report by Dongwu Securities highlighted Xpeng's strategy to reclaim market share through multifaceted technical innovations, paving the way for significant category expansion

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By the second half of 2025, Xpeng is set to roll out incremental enhancements pertaining to extended-range technologies and self-developed chips, potentially positioning itself for robust market competition by 2026. The manufacturer plans to unveil three entirely new models and four upgraded versions, with anticipated sales reaching around 400,000 units by that year, including a new B-segment SUV and a "land aircraft carrier" model.

Currently, Hongmeng Zhixing encompasses several brands including Zun Jie, Xiang Jie, Wen Jie, and Zhi Jie, collectively achieving sales of 35,000 units in January, an increase of 3.9% year-on-yearThe Wen Jie M9, Wen Jie M7, Zhi Jie R7, and Xiang Jie S9 models recorded sales of 12,000, 8,443, 11,000, and 643 units respectivelyThe Wen Jie series, particularly led by its high-end positioning, has enabled Seres to achieve profitability thanks to Huawei's backing.

Noteworthy is that this year marks a shift in the collective pricing strategies of various NEV manufacturers, starting with Tesla's lead in cutting pricesFollowing suit, brands like Xpeng, NIO, and several others sought to lower purchase thresholds through cash incentives and favorable financial termsBYD also announced that lower-priced models would now feature the upgraded "Tianshen Zhi Yan" intelligent driving system while maintaining their price points, highlighting a new angle in the unfolding price competitionThe smart driving systems have also seen greater accessibility, with models like Zhi Jie New S7 leveraging financial incentives to lower entry barriers for consumers.

As highlighted by Cui Dongshu, Secretary-General of the CPCA, the price wars are stabilizing with moderate promotional efforts observed since JanuaryThough promotional messaging has been prolific, the state of pricing reflects positively on the overall retail landscape since the peak buying season in the fourth quarter of 2024.

The average pricing of NEVs has gradually declined from 184,000 yuan in 2023 to 172,000 yuan in 2024, and further down to 164,000 yuan in January this year

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