German auto supplier Bosch has issued a stern warning to Chinese electric vehicle (EV) makers that an escalating price war would not only hurt their profitability but also erode their status as global market leaders.
David Xu Daquan, president of Bosch China, told reporters at a media briefing on Tuesday that he had made a proposal to Chinese President Xi Jinping to create a fair and orderly market-based mechanism to prevent cutthroat competition among the automakers and the country’s supply chain. seller.
“In the global auto industry, Chinese companies are now the leaders, at least in intelligence and electrification,” he said. ‘But only high-quality growth [of the industry] will be good for the economy and enhance the image of Chinese companies as responsible leaders.”
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Xu was among the business leaders who met Xi in East China’s Shandong province on May 23, when the Chinese president struck a pro-business and pro-growth tone to rally bosses of state-owned enterprises, senior executives of multinationals, private entrepreneurs and reassure investors. about China’s economic prospects.
Bosch, the world’s largest automotive supplier, has had a presence in China since 1909. It reported revenues of €18.2 billion (US$19.5 billion) in 2023, up 5.2 percent year-on-year.
About 80 percent of the company’s sales in China come from the automotive segment, which includes autopilot software for autonomous driving systems, electromechanical brake boosters and anti-lock braking products.
Xu’s proposal to Xi came after mounting concerns about the overall profitability of Chinese EV makers and component suppliers as they engaged in an aggressive price war to gain market share and clear inventories amid overcapacity issues.
Xu did not reveal Xi’s response to his suggestions.
‘The visa exemptions [Beijing] awarded to German citizens help our engineers to travel to China to improve their work efficiency,” he told Xi, adding that China’s efforts to protect the intellectual property rights of foreign companies strengthened his company’s confidence in increasing its investments in the world’s second largest economy.
His comments on the price war were in stark contrast to those of BYD founder and chairman Wang Chuanfu, who told a business conference in the southwestern Chinese city of Chongqing on June 7 that spirited rivalry could boost the competitiveness of Chinese EV makers because only companies with the best technologies and production power would survive.
In February, BYD, the world’s largest electric vehicle (EV) maker, fired the first salvo in a price war on the mainland, slashing the prices of almost all its cars by 5 to 20 percent.
After that, prices for 50 models from a range of brands fell by an average of 10 percent, Goldman Sachs said in a report in April.
A new cut of 10,300 yuan (US$1,420) per vehicle by BYD, or 7 percent of the company’s average sales price, could push the national EV industry into losses, the US bank added.
Mainland China is the largest EV market in the world, with EV sales accounting for 60 percent of the global total.
Last week, the European Union’s proposed import tariffs of up to 38 percent were imposed on Chinese-made electric cars, following a nine-month anti-subsidy investigation.
The White House announced in May that the US would impose a 100 percent tariff on imported Chinese battery-powered cars, nearly quadrupling the previous 27 percent tariff.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice covering China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit the SCMP Facebook page Tweet Pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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