Tesla has joined 15 Chinese automakers in signing a pledge to effectively end the electric car price war, and promote “core socialist values”.
It is the only foreign automaker to sign the four-point pledge at the 2023 China Automobile Forum.
The pledge was also signed by BYD; Cherry; Great Wall Motor; Lotus, Polestar and Volvo owner Geely; Owner of MG and LDV SAIC Motor; and electric vehicle (EV) firms Nio and XPeng.
The head of Volkswagen in China, Ralf Brandstätter, also said his company “will not participate in the development of this unhealthy market for the sake of short-term volume growth”, but did not sign the pledge.
According to a translated version of the pledge, the signatories have pledged to “carry out core socialist values, actively fulfill social responsibilities, take an active role in stabilizing growth, strengthening confidence and preventing risks”.
They also promised to “take heavy responsibility, and work together to make important contributions to the country’s economic growth”.
Following a price war that broke out in China’s electric vehicle market late last year due to slow EV sales, automakers have pledged to “maintain fair competition rules, and not disturb fair competition rules in the market with abnormal prices”
The pledge comes as China’s economy weakens and the government looks to the automotive sector to help fuel consumption.
Fu Bingfeng, executive vice president and secretary general of the China Association of Automobile Manufacturers, said there was still huge room for growth in the automotive segment in China, but admitted it was “in a slow recovery process”.
He expects production and sales of new energy vehicles – a term that includes EVs and plug-in hybrids – to approach 10 million vehicles this year.
The Chinese government has extended the tax exemption on EV purchases until the end of 2025, and is working to drive EV adoption in rural areas.
Just a day after signing the pledge, however, Tesla introduced a cash rebate offer for new cars in the Chinese market according to reports from Reuters.
A 3500 yuan (A$725) rebate is available to buyers referred by existing Tesla owners.
The company sold 247,217 Chinese-made vehicles in the second quarter of the year, the highest since it began shipping vehicles from its Shanghai factory in 2020. Even so, Reuters reported it laid off an unspecified number of employees in China working on its battery packs.
The Chinese-built Model 3 and Model Y are exported to various global markets, including Australia.
The company has cut prices repeatedly in the Chinese market over the past few months, with rival carmakers such as Volkswagen, BYD and Nio also joining the fray with cuts of their own. Tesla has also announced price cuts in markets such as the US and Australia.