Tesla and Chinese Automakers Reach Ceasefire Agreement Following Price War

Tesla and 16 Chinese automakers have signed a truce to end the prolonged EV price war in China. The companies have pledged to maintain fair competition and avoid “abnormal pricing” in the world’s biggest EV market. Tesla was the only foreign automaker at the meeting. The truce is a four-point agreement that aims to restore stability in the Chinese EV market. The agreement is expected to signal a possible end to a price war that has rattled the industry this year.

The cause of the price war between Tesla and Chinese automakers was due to Tesla cutting prices in China in October 2022 after losing market share to its competitors, such as Warren Buffett-backed BYD. In early January 2023, Tesla slashed prices again for its China-made Model 3 and Model Y. Tesla has cut prices in many markets worldwide to bolster demand amid a growing challenge from other EV makers. The price cuts seemed to have a major impact, and most of its Chinese rivals posted steep drops in sales. Tesla’s cuts sparked a price war in the country, and a number of car manufacturers in China followed suit by cutting prices or offering discounts. The EV price war caused Tesla some trouble as it angered some customers who complained about the company’s ever-changing prices.