“VW and GM, who have historically been leaders in the market, both believe they can salvage their positioning and protect the share they currently have,” said Tu Le, an analyst at China-based research firm Sino Auto Insights.
“It points to how important China is for their global ambitions and, to a lesser degree, the confidence that they can ultimately design, engineer and manufacture products that can compete with Tesla and China EV Inc.”
The price war has cut into margins for Chinese EV makers too, and many remain unprofitable. Their deeper pockets give established foreign automakers who are determined to fight for share in China, the ability to play a long game.
“We’ll allow our enemies to fight first, and we will come back with bags of money and technologies to take them,” Yang Honghai, chief operating officer of Kia China, said at an industry forum in June.
“We are not giving up on the market but only choosing to come back at a more appropriate time,” he said. Kia is set to enter China’s EV market with its first EV, the EV6 crossover, via imports in August.
German luxury brands BMW, Mercedes Benz and Audi managed to hold share roughly flat in China in the first half after offering dealer discounts that topped 25 percent in some cases, according to sales data and analysts who track pricing.
BMW also announced an increased investment in product development in China with a new research and development hub in Shanghai to develop EVs to be sold globally.
“The German brands benefit from significant global scale,” said He Lei, CEO of Chinese EV trading platform xChuxing. “Meanwhile, they are continuously chasing Chinese competitors with China-developed products. How can they not be competitive?”
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