MICHEL MARTIN, HOST:
We've been hearing a lot about the U.S.-China trade war, but there is another war brewing in China - over the price of electric cars. Reporter Sherisse Pham has more.
SHERISSE PHAM: China's electric-car makers are slashing prices in an effort to boost sales. But there are growing fears that an escalating price war could seriously dent the country's EV industry.
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XIAOPENG HE: (Through interpreter) Actually, we are strongly opposed to price wars.
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STELLA LI: It's not sustainable. You have to survive, but this is not healthy.
PHAM: That was XPeng founder Xiaopeng He and BYD executive Stella Li speaking to CNBC and Bloomberg. The comments from Li raised eyebrows because industry experts say BYD is the one driving this current price war.
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UNIDENTIFIED NARRATOR: This is BYD.
PHAM: China's biggest EV maker has cut prices for its cars by as much as a third. Its budget electric car now costs less than $8,000. Other EV makers have followed suit, leading to an unprecedented race to the bottom.
LEI XING: I've covered the Chinese auto market for, you know, about a quarter century, and I've seen plenty of price wars during that time. But none has been this brutal, this ruthless, this widespread.
PHAM: That's Lei Xing, an independent industry analyst and the former chief editor of China Auto Review. Xing says the current price war is also notable because Chinese regulators are signaling they are unhappy and will intervene. A few weeks ago, China's car manufacturing association issued a statement and took a subtle swipe at BYD. A certain automaker has led a substantial price reduction campaign, the statement said, adding that price wars cause panic, squeeze profits and hold back industry development. Tu Le is managing director at Sino Auto Insights. He says overcapacity, with too many brands making too many electric cars, is just part of the problem.
TU LE: So there's overcapacity in e-motors. There's overcapacity in batteries. There's overcapacity in mineral refining - up and down the supply chain.
PHAM: And Le says that overcapacity will likely spill over into foreign markets, such as Europe and maybe Mexico. Meanwhile, Chinese EV makers are in a bit of a bind because consumers at home just aren't spending these days, which means they won't be pumping the brakes on this price war any time soon.
For NPR News, I'm Sherisse Pham in Hong Kong.
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