(Bloomberg) — Mercedes-Benz Group AG cut prices on two electric car models in China by as much as $33,000, as heated competition in the world’s biggest EV market impacts sales.
The luxury automaker said in a statement on its website late Tuesday that it was reducing prices on certain models from its EQ range, effective Wednesday, and that it would provide subsidies to customers who recently bought the cars.
The cuts seemed to be immediate, with the EQE priced at 478,000 yuan ($67,675) on Mercedes’ Chinese website Wednesday morning, compared to 528,000 yuan as recently 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 because the information is private.
Some dealers have already been carrying out promotions to try and boost sales, with EQS deliveries at times dropping to as low as 100 a month, the people said.
The EQS is the all-electric version of Mercedes’ flagship S-Class model, a vehicle that’s meant to showcase the automaker’s most advanced technologies. While the EQS’s low-slung roof makes it very aerodynamic — increasing its range on a single charge — the design means there’s less headroom in the rear seating compartment, a drawback in the Chinese market where wealthy customers may prefer to sit in the back rather than drive the car themselves.
In a statement to Bloomberg News, Mercedes said the top-end EV segment in China is still evolving, especially for cars priced above 1 million yuan.
“Mercedes-Benz continually observes and analyzes dynamic market developments, including the current positioning of other manufacturers in the luxury segment. Based on that, Mercedes-Benz is repositioning certain EQ models in China,” it said.
Foreign and legacy car brands are falling behind rising local names in China, with domestic carmakers accounting for almost 80% of EV sales in the first seven months of 2022, according to the China Passenger Car Association.
Mercedes sold about 8,800 EVs in the country from January to July, data from the China Automotive Technology and Research Center show, including less expensive EQA, EQB and EQC models. Chinese EV giant BYD Co., which targets more of the middle market, sold nearly 220,000 EVs in October alone.
Read more: China’s BYD Aims to Rule EV World by Being Anything But Tesla
Mercedes isn’t the only foreign carmaker responding to Chinese market pressures. Elon Musk’s Tesla Inc. lowered prices across its lineup in China in October.
“Local automakers have already strengthened their muscles,” PCA Secretary General Cui Dongshu said at a briefing earlier this month. “After making up the technological gap in car manufacturing in the new energy vehicle sector, Chinese automakers have an apparent advantage in both supply chains and end sales.”
—With assistance from Selina Xu.