Global EV price war heats up as Tesla, Nissan and Hyundai slash prices

Automakers worldwide are cutting electric vehicle prices as demand slows; Tesla, Hyundai, Nissan and Chinese brands lead a global price war to attract buyers

What started as a price-cut strategy in China has now turned into a global electric vehicle (EV) price war. Automakers across the US, Europe, and Asia are lowering prices to attract buyers amid slowing demand and reduced government incentives. Tesla, Nissan, Hyundai, and others are leading the charge, offering cheaper models to stay competitive in a rapidly evolving market, Nikkei Asia reported.

 

In the US, Tesla announced new and lower-priced versions of its flagship vehicles this week. The company’s updated Model Y sport utility vehicle now starts at $39,990, around $5,000 less than the previous entry-level model. The new versions offer shorter driving ranges and simpler interiors.   

 

Policy changes force automakers to adapt

 

Tesla’s aggressive pricing strategy follows the Trump administration’s decision to eliminate the $7,500 federal EV tax credit, which had made electric cars more affordable for US consumers. The rollback, originally introduced under then-President Joe Biden, has effectively made many EVs about 20 per cent more expensive, the news report said.

 

To offset the loss of incentives, Tesla is introducing new, budget-friendly models to maintain demand. Tesla’s control of the US EV market has dropped from over 80 per cent five years ago to below 50 per cent now, the news report said.

 

Tesla continues to face another major challenge: its global supply-chain dependency. Despite assembling cars and batteries in the US, the company relies heavily on imports from China for rare earth metals, crucial for EV motors and batteries.

 

China’s move to tighten control over rare earth exports has added uncertainty. With trade tensions between Washington and Beijing still high, sourcing alternatives remains difficult. These challenges are limiting Tesla’s ability to cut costs further and expand its low-cost lineup, the Nikkei Asia report said.   

 

Automakers join the price cut trend

 

The price war is not limited to Tesla. General Motors (GM) and Ford Motor are also preparing to introduce EVs priced under $30,000, hoping to capture cost-conscious buyers. South Korean automaker Hyundai has joined the fray too, cutting prices for some of its new US EV models by up to 20 per cent.

 

In Japan, where EV adoption remains low, Nissan has reduced prices for its revamped Leaf model to about 5.19 million yen ($34,000), a discount of 60,000 yen. The company faces mounting competition from Chinese automakers like BYD, which has been offering discounts of more than 1 million yen on its electric models in Japan to capture market share.

 

Chinese battery expansion shapes global market

 

China’s battery producers are playing a central role in driving down EV prices worldwide. Contemporary Amperex Technology Ltd. (CATL), the world’s largest battery maker, is expanding rapidly with new facilities, including a joint investment with Stellantis in Europe.

 

According to Goldman Sachs, EVs currently make up around 15 per cent of global auto sales, but the figure is expected to surge to 52 per cent by 2040 as prices continue to drop and technology improves, the news report said.