KATHMANDU: The electric vehicle (EV) price war that started in China is now expanding to markets around the world.
As demand slows and government incentives fade, automakers like Tesla, Hyundai and Nissan are cutting prices to stay competitive.
Tesla launched new, cheaper versions of its Model Y and Model 3 in the U.S. this week. The new Model Y starts at $39,990, which is about $5,000 less than the previous base model. These new lower-priced models offer a shorter driving range and come with more basic interiors.
The move comes after the U.S. government under President Donald Trump ended the $7,500 EV tax credit introduced by the Biden administration. The removal of this subsidy effectively made popular models like the Model Y about 20% more expensive, forcing Tesla to act quickly to attract buyers.
Many investors see the new price cuts as a necessary but limited effort to regain ground. CEO Elon Musk has often promised to launch a model priced under $30,000.
Although Tesla builds its U.S. models domestically, it still depends on Chinese imports for rare-earth materials used in batteries and motors. China has tightened control of these materials, making it harder for U.S. automakers to find cheaper alternatives and further complicating Tesla’s cost-cutting efforts.
Other major automakers are also joining the price battle. General Motors and Ford plan to launch EVs below the $30,000 mark soon. Hyundai has already reduced prices on its new EVs in the U.S. by up to 20%. The company’s global head, Jose Munoz, said Hyundai aims to bring affordable models to Europe, India and China as well.
In Japan, Nissan announced a lower starting price for its updated Leaf electric car at about $34,000, making it around $400 cheaper than before. The move comes as Chinese automaker BYD expands in Japan, offering deep discounts of up to $7,800 on its EVs.
Falling prices are also linked to the growing influence of Chinese battery makers. CATL, the world’s largest EV battery supplier, is now investing in a factory with Stellantis in Europe to expand its global reach.
According to Goldman Sachs, EVs will make up only 15% of global car sales in 2025, but that number could rise to 52% by 2040 as technology improves and costs fall.
Experts say the EV market is entering a new phase, from being driven by early adopters to becoming dominated by affordable, mass-market vehicles. However, as subsidies disappear, many automakers in the U.S. and Europe are struggling to make a profit from EV sales.
This could lead to industry restructuring and clearer winners and losers in the years ahead, according to a report by Nikkei Asia.
