The pricing strategies behind New Energy Vehicles price war: Taking Tesla and XPeng as examples

Abstract

With the acceleration of the new energy vehicle industry, many automobile companies have entered the market and formed a competitive situation. Tesla, as the leader of the initial producer of energy storage equipment and new energy vehicles, further lowered the price at the beginning of the year and had a great impact on the price war of new energy vehicles. XPeng, an AI+Internet-based intelligent car manufacturer, followed Tesla’s pace in the price war. However, it can be found that XPeng’s revenue level is not up to expectations after the price reduction, while Tesla’s sales are increasing annually and its market share occupies the forefront. Therefore, the success of Tesla and the pricing strategy factors behind it can help XPeng, an emerging domestic automobile brand, find the current bottleneck and provide an important reference value for future development. This paper analyzes the development status of Tesla and XPeng and three factors affecting prices through case comparison. The study found that Tesla and XPeng differ in managerial decisions and production factors. XPeng has higher supply chain costs, no emerging battery technology, limited brand positioning, and insufficient demand. Hence, changes need to be made to enhance XPeng’s competitiveness.