BYD fires the latest shot in China's EV price war with 12% price cut

• BYD, the world's top-selling EV seller, has launched a cheaper version of its Yuan Plus car.
• Rivals such as Xpeng and Tesla have also initiated price drops and incentives to entice buyers
• It comes as EV sales have dropped in China.

The latest version of BYD's best-selling Yuan Plus has gone on sale in China starting at about 120,000 yuan, or about $16,600, making it roughly 12% cheaper than its predecessor.

The price cut, which comes amid an accelerating EV price war and slowing sales in the world's biggest car market, was first reported by Reuters.

BYD rival Xpeng temporarily dropped its prices last month in response to sales hitting a three-year low, The South China Morning Post reported. Meanwhile, Geely Auto cut the prices of its Galaxy L6 and L7 models by 15% and 9% respectively, per Reuters.

Tesla has also announced price incentives for Chinese customers. Discounts of up to 34,600 yuan are on offer for Model 3 or Model Y orders before the end of March, the company said on Weibo.

In the US, Elon Musk's company cut the average Tesla price by about 25% last year in a bid to drive up sales.

BYD, backed by Warren Buffett, took Tesla's crown as the world's largest EV seller in the fourth quarter of 2023 by delivering 526,409 cars compared with Tesla's 484,507.

Last year, BYD said it sold 3 million vehicles worldwide, making it one of the top 10 car makers. As well as cornering the affordable EV market, it's also dabbling in the other end of the market with a $233,000 electric supercar.

Chinese EVs sold in the US face a 25% tariff making it very difficult for them to compete with cars made in America. As a result, Shenzhen-based BYD is "not planning to come to the US," BYD Americas CEO Stella Li told Yahoo Finance last week.

Musk has warned that without trade barriers, Chinese EV makers would "demolish" their rivals in the West.