Chinese Automakers Tell Suppliers to Cut Costs as Price War Deepens

Faced with a bruising price war in the fast growing but crowded domestic market for electric vehicles, Chinese automobile manufacturers are pressuring suppliers to deliver hefty cost cuts.

China’s BYD, the world’s largest manufacturer of electric vehicles, asked a supplier to reduce its product prices by 10 percent starting next year, according to a company email that was apparently leaked and circulated widely on the internet in China.

He Zhiqi, BYD’s executive vice president, said that the competition for so-called new energy vehicles — China’s preferred phrase for fully electric and gas-electric hybrid vehicles — was entering a “decisive battle” or “knockout match,” according to the email with the subject line “BYD Passenger Vehicle Cost Reduction Requirements in 2025.”

“In order to enhance the competitiveness of BYD passenger cars, we need the entire supply chain to work together and continue to reduce costs,” Mr. He wrote.

On Wednesday, a BYD spokesman wrote on Weibo, the Chinese social media site, that annual price negotiations with suppliers are a common practice in the automotive industry. He added that because of BYD’s large scale, it sets “price reduction targets” for suppliers that are not mandatory and can be negotiated. He did not comment on the email specifically nor whether other suppliers were facing similar demands.

BYD did not respond to requests for comment.

Earlier this week, SAIC Maxus Automotive, an arm of Chinese state-owned automobile manufacturer SAIC, sent a letter to its suppliers asking for a 10 percent reduction in costs, citing oversupply in China’s automobile market, according to news reports in state media. The letter noted that there are so many manufacturers launching new cars that it