BEIJING (Reuters) – Chinese automaker BYD is asking its suppliers to cut their prices, a sign that the brutal price war in the world’s largest auto market is set to escalate.
According to a leaked email dated November 26, BYD has asked an unidentified supplier to reduce its prices by 10% from January 1. The email was widely shared on social media, but Reuters was unable to verify its authenticity.
A BYD executive confirmed that the company sets price reduction targets for suppliers when making large-scale purchases, but stressed that these targets are negotiable and not mandatory. The executive also stated that annual price negotiations with suppliers are a common practice in the automotive industry.
BYD has become a relentless discounter in the price war, which was started by Tesla last year. The company has helped unseat its US rival as the world’s biggest seller of electric vehicles, with a 15.8% share of the overall market in the first nine months.
Another Chinese automaker, SAIC Motor’s Maxus unit, has also sent a letter to its suppliers this week asking them to help reduce costs by 10% to cope with the price war and oversupply in the market.