The price wars in China, one of the world’s biggest EV markets, are intensifying. Over the weekend, EV major Tesla (NASDAQ:TSLA) slashed the prices of its cars in major markets around the world, including China. The company cut the starting price of its revamped Model 3 in China by 14,000 yuan to RMB231,900 ($32,000).
Following TSLA’s price cuts, Chinese EV major, Li Auto (NASDAQ:LI), slashed its prices by RMB30,000 ($4,144) for all models, including its L7, L8, L9 series, and its new, full-electric MEGA model. Shares of LI declined by more than 6% following the price cuts.
China’s State Planner Warns of Intense EV Price Wars
Interestingly, China’s state planner, The National Development and Reform Commission (NDRC), warned that the price wars among EV companies in China could intensify.
There is also the possibility that supply of EV cars in China could exceed demand. The NDRC has estimated the demand for new energy vehicles, including EVs and plug-in hybrids, to grow to 2.1 million units in 2024. In contrast, BYD (OTC:BYDDY) and Li Auto had planned to increase their vehicle deliveries by 2.3 million units for this year.
According to the NDRC, BYD and Denza (another Chinese EV company) have been leading the price wars by slashing the prices in the range of 7.15% to 9.7% in April.
What Is the Price Prediction for the IDRV ETF?
The iShares Self-driving EV & Tech ETF (NYSEARCA:IDRV) offers a good option for investors interested in the EV industry. Analysts remain cautiously optimistic about IDRV, with a Moderate Buy consensus rating based on 29 Buys, 26 Holds, and two Sells. Over the past year, IDRV has declined by more than 15%, and the average IDRV price target of $36.68 implies an upside potential of 27.4% from current levels.
