SHANGHAI: Shares of Chinese electric vehicle makers slid following a report that Tesla Inc is planning a more affordable model targeting European consumers, intensifying competition in an industry where price wars have eroded profit.
A new Tesla model that will cost €25,000 (US$26,863) will be produced at its factory near Berlin, Reuters said Monday, citing an unnamed source.
Chief executive officer Elon Musk announced the plan last week when he visited the Tesla factory in Gruenheide, without saying when production would start, according to the report.
Nio Inc tumbled more than 5% in Hong Kong on Tuesday, leading declines among peers. XPeng Inc briefly slumped more than 3% while BYD Co edged lower.
Chinese EV makers have seen monthly sales surge recently, yet not all of them have been treated equally by investors. Nio’s shares have lagged peers this year as it continues to post losses.
The Tesla news also comes after the European Union launched an anti-subsidies probe into EVs manufactured in China, a move that may see measures such as countervailing duties imposed.
“The Tesla news could weigh on investor sentiment for its Chinese competitors, and Nio — with its weak financials and productions — could be more vulnerable to selling pressure,” said Andy Wong, a fund manager at LW Asset Management Advisors Ltd.
Nio is cutting jobs and may spin off non-core businesses to reduce costs and improve efficiency, Bloomberg reported last week. Its shares rallied more than 7% on Monday. A separate report in October showed the firm is building a dealer network in Europe to speed up sales growth.
A cheaper model by Tesla, produced in Germany, may improve the US firm’s competitive edge over Chinese brands as carmakers race to bring down costs and make appealing, affordable EVs.
For comparison, BYD’s models in Europe include the €40,000 Atto 3 sport utility vehicle and the €28,900 Dolphin hatchback.
“Europe has been a question mark for Chinese EV makers because of the ongoing probe,” said Vey-Sern Ling, managing director at Union Bancaire Privee.
“Xpeng and BYD continue to ramp up well in Europe, but Nio has its own issues. Its deliveries are much weaker than its Chinese peers.”