BYD's plan to destroy the competition: How an aggressive price war between Chinese brands could have far reaching implications for Australia as many brands such as GWM, XPeng, Chery, Geely, Deepal might not survive | Analysis

BYD could be the one Chinese car brand to rule them all, as it flexes its muscles to smash the competition.

The carmaking giant has embarked on an aggressive electric car price war in its home market, which could mean many of its rivals cease to exist.

The carmaker has just unleashed its third round of price cuts since March in China, with its cheapest model, the Seagull hatchback, now costing less than A$12,000, according to reports.

The same aggressive market share grabbing price reductions have been applied to 22 models in its Chinese line-up.

GWM Chairman, Wei Jianjun, said recently the industry could have a catastrophic collapse if this behaviour continues.

“If it continues like this, the safety of China’s auto industry will be seriously threatened,” said Mr Wei to Sina Finance in an interview translated to English.

“Now, Evergrande in the automobile industry already exists, but it has not collapsed.”

“Some products have been reduced from 220,000 yuan ($47,000) to 120,000 yuan ($26,000) in the past few years,” said Mr Wei to Sina Finance.

“What kind of industrial products can be reduced by 100,000 yuan ($21,000) and still have quality assurance? Well this is absolutely impossible.”

Even the Chinese government has voiced concerns, with reports stating the Ministry of Industry and Information Technology has warned against disorderly price wars and the Chinese Communist Party's official outlet, the People’s Daily, warned against the conduct.

This heavy discounting could push other makers to the brink as they either lose market share or follow with tit-for-tat discounts that lead to loss making sales.

The boss of XPeng’s local importer TrueEV, Jason Clarke, told CarsGuide late last year the word from China is not all new brands will survive.

“There’s more like 200 [EV brands in China], and the chairman of XPeng said only seven will survive. So, he clearly thinks he’s going to be one of them,” he said.

The same story applies Down Under, as Clarke said not all the Chinese brands coming to Australia would survive and even legacy brands will “find it hard”.

Australia is currently enjoying a golden era of new car brands offering vehicles at affordable prices, but that might be short lived if competition in the Chinese market disintegrates.