Mercedes slashes EV prices in China by up to $33,000 due to delayed sales

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(Bloomberg) – Mercedes-Benz Group AG has slashed the prices of two electric car models in China by up to $33,000 as stiff competition in the world’s biggest electric vehicle market impacts sales.

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The luxury automaker said in a statement on its website late Tuesday that it is reducing prices on select models in its EQ lineup, effective Wednesday, and will provide subsidies to customers who have recently purchased the cars.

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The cuts appeared to be immediate, with the EQE priced at 478,000 yuan ($67,675) on Mercedes’ Chinese website on Wednesday morning, down from 528,000 yuan as late as Tuesday. The EQS luxury edition model was listed at 956,000 yuan on Wednesday, down from 1.19 million yuan on Tuesday, equivalent to a reduction of around $33,000.

Mercedes is making the cuts because sales have been disappointing in China, according to people familiar with the company’s plans, who asked not to be identified as the information is private.

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Some dealers have already run promotions to try and boost sales, with EQS deliveries sometimes dropping to as low as 100 a month, people said.

The EQS is the all-electric version of Mercedes’ flagship S-Class model, a vehicle intended to showcase the automaker’s most advanced technologies. While the EQS’ low roof makes it very aerodynamic – increasing its reach on a single load – the design means there’s less headroom in the rear seat compartment, a disadvantage in the Chinese market where wealthy customers may prefer to sit in the back rather than drive the car themselves.

Changing market

In a statement to Bloomberg News, Mercedes said the premium electric vehicle segment in China continues to evolve, especially for cars priced above 1 million yuan.

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“Mercedes-Benz continuously observes and analyzes dynamic market developments, including the current positioning of other manufacturers in the luxury segment. Based on this, Mercedes-Benz is repositioning certain EQ models in China,” he said.

Foreign and traditional car brands are falling behind rising local names in China, with domestic automakers accounting for nearly 80% of electric vehicle sales in the first seven months of 2022, according to the China Passenger Car Association.

Mercedes sold around 8,800 electric vehicles in the country from January to July, according to data from the China Automotive Technology and Research Center, including the cheaper EQA, EQB and EQC models. Chinese electric vehicle giant BYD Co., which targets more of the middle market, sold nearly 220,000 electric vehicles in October alone.

Read more: China’s BYD aims to rule the EV world by being anything but Tesla

Mercedes is not the only foreign automaker responding to pressure from the Chinese market. Elon Musk’s Tesla Inc. cut prices for its lineup in China in October.

“Local automakers have already flexed their muscles,” PCA General Secretary Cui Dongshu said during a briefing earlier this month. « Having closed the technology gap in car manufacturing in the new energy vehicle sector, Chinese automakers have an apparent advantage in both supply chains and end sales. »

—With help from Selina Xu.