Tesla has joined 15 Chinese automakers in signing a pledge to effectively end an electric car price war, and promote “core socialist values”.
It was the only foreign automaker to sign the four-point pledge at the 2023 China Automobile Forum.
The pledge was also signed by BYD; Chery; Great Wall Motor; Lotus, Polestar and Volvo owner Geely; MG and LDV owner SAIC Motor; and electric vehicle (EV) firms Nio and XPeng.
The head of Volkswagen in China, Ralf Brandstätter, also said his company “will not participate in this unhealthy market development for the sake of short-term volume increases”, but didn’t sign the pledge.
According to a translated version of the pledge, the signatories have vowed to “carry forward the socialist core values, actively fulfil social responsibilities, take an active role in stabilising growth, strengthening confidence and preventing risks”.
They’re also promising to “shoulder heavy responsibilities, and work together to make important contributions to national economic growth”.
Following the price war that broke out in the Chinese electric vehicle market late last year following slowing EV sales, the automakers have pledged to “maintain fair competition order, and not disturb the fair competition order in the market with abnormal prices”
The pledge comes as the Chinese economy is flagging and the government looks to the automotive sector to help fuel consumption.
Fu Bingfeng, executive vice president and secretary-general of the China Association of Automobile Manufacturers, said there’s still large room for growth in the automotive segment in China, but acknowledged it’s “in the process of slow recovery”.
He expects production and sales of new energy vehicles – a term inclusive of EVs and plug-in hybrids – to approach 10 million vehicles this year.
The Chinese government has extended its tax exemption on EV purchases to the end of 2025, and is trying to spur EV adoption in rural areas.
Just a day after signing the pledge, however, Tesla introduced a cash rebate offer on new cars in the Chinese market according to a report from Reuters.
The 3500 yuan (A$725) rebate is available to buyers referred by an existing Tesla owner.
The company sold 247,217 Chinese-made vehicles in the second quarter of this year, its highest since it started delivering vehicles from its Shanghai factory in 2020. Despite this, Reuters reports it is laying off an unspecified number of employees in China who work on its battery packs.
Chinese-built Model 3s and Model Ys are exported to numerous global markets, including Australia.
The company has slashed prices repeatedly in the Chinese market over the past several months, with rival automakers like Volkswagen, BYD and Nio also jumping into the fray with cuts of their own. Tesla has also announced price cuts in markets like the US and Australia.