Tesla and other Chinese EV automakers tried to put an end to the price war
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Several days ago Tesla and 16 Chinese automakers declared a truce in their long-standing price wars. The pact, designed to stabilize the largest EV market in the world, was signed at the China Association of Automobile Manufacturers (CAAM) in Shanghai.
A Unifying Pact: No More Price Disruptions
The “letter of acceptance for maintaining fair market order in the automobile industry” encompassed four essential commitments from the automakers, with the key one being to stop disrupting the competitive market order with abnormal pricing.
The agreement was signed by some of the biggest players in the Chinese domestic market, including Tesla, BYD, Nio, Li Auto, Xpeng, China FAW, Dongfeng Motor, SAIC, Changan Automobile, BAIC, GAC, China National Heavy Duty Truck, Chery, JAC, Geely, and Great Wall Motor.
Although the agreement was self-regulated and not legally binding, its significance could not be understated.
Sources from the Ministry of Industry and Information Technology asserted that regulating promotional activities, including avoiding reckless price cuts, is necessary for the health and growth of the Chinese auto industry.
This move appeared to signal the end to the price war, which had led to uncertainties in the market and delayed expansion plans, such as Tesla's Giga Shanghai expansion.
An Unexpected U-Turn: The Withdrawal of the Price Pledge
However, the CAAM has decided to retract the pledge made by the 16 automakers to refrain from "abnormal pricing."
The pledge, carefully coordinated by CAAM, was viewed as a ceasefire in the heated price war that had been affecting the profitability of the EV industry. The aim was to promote stability and healthy competition in the market.
Tesla's Move: A Sales-Boosting Strategy
Complicating the situation further, Tesla unveiled a global program on Friday. The program offers additional incentives to potential buyers through referrals from existing customers, a sales strategy long employed by traditional automakers.
While this move could be viewed as a savvy business decision aimed at boosting sales, it comes at a time when the EV industry in China was moving towards maintaining a fair market order. This has raised questions about whether Tesla's new initiative could reignite the pricing wars and undermine the market's stability.
CAAM's Response: Fostering Fair Competition and Independent Pricing
Reacting to this development, CAAM posted a statement on its website on Saturday, acknowledging that the pricing pledge had infringed upon China's antitrust law. As a result, it decided to withdraw the pledge from a list of commitments that the automakers had initially signed under the guidance of an official from the Ministry of Industry and Information Technology.
Despite the withdrawal, CAAM has stated that it will continue to encourage the 16 companies and other association members to strictly adhere to the antitrust law and engage in fair competition through independent pricing. This raises the question of what the future will look like for the EV market, not only in China but worldwide, as industry leaders navigate the complexities of pricing, competition, and market stability.
A New Era in the EV Industry
This development underlines the complexity of the global EV market. It also stresses the delicate balancing act required between ensuring market competitiveness, upholding antitrust laws, and creating a stable and sustainable industry that benefits consumers, manufacturers, and the wider society.
The unexpected withdrawal of the pledge, coupled with Tesla's new referral program, may redefine the landscape of the EV industry. As we progress, watching how automakers balance competitive pricing and maintaining market order will be intriguing.
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Tesla China has outlined some features in Tesla’s latest update in the region, which is version 2024.26.9. In the list of features, Tesla mentions many of the features we’re already aware of, including Automatic Emergency Braking Improvements, YouTube Music and more, but they also reveal one additional feature that’s exclusive to China. The new feature allows the new blind spot indicator to light up if there’s something in the way when you’re opening your door. The blind spot indicator is exclusive to the new Model 3 and Cybertruck, which features little red LEDs in the front speaker grills next to the mirror.
Blind Spot Door Warnings
With update 2024.26.9, Tesla says that if any vehicle door handle button is pressed on vehicles with a Blind Spot Warning Light (currently just the 2024 Refreshed Model 3 Highland and the Cybertruck), the blind spot warning indicator in the vehicle’s front speakers will illuminate.
This object detection includes cars, pedestrians, cyclists, and “other objects”. We’re not quite sure what fits into the “other objects” category, but likely things that FSD picks up on normally – including traffic cones, bollards, and other large obstacles.
According to Tesla’s description, there appears to only be a visual warning for the driver and front passenger, with nothing displayed on screen or an audible tone. We’re sure Tesla will continue to expand and refine this feature like they’ve done with various features in the past, but for now, it's only available in China. Blind Spot Door Warnings need to be enabled under Controls > Safety before this feature will function.
We’d love to see Tesla use the ambient light strip in the vehicle to warn passengers and drivers when their door is obstructed – it would be a fantastic use of a luxury feature for utilitarian safety – rather than just the single red LED inside the door speaker. Additionally, an audio warning would be excellent for those who may not see the red dot.
Tesla appears to be making progress on FSD in China, with the latest update available in the region now displaying the FSD button in the vehicle. Tesla makes no note of the change in the release notes, nor does it appear to be available in any other regions that are expected to receive access to FSD in the future.
FSD in the UI
In the Autopilot options in China, users could previously select Traffic-Aware Cruise Control or Auto Steer (Beta), however, as of 2024.26.9, the Full Self Driving (Supervised) button is now visible – but greyed out. Tapping on the option doesn’t do anything just yet, but the addition of the button could be a hint that Tesla is planning to enable the feature soon.
Underneath the Autopilot selection, Tesla also has a phrase that says, “Full Self-Driving (Supervised) needs to use an updated version of navigation maps. Connect to Wi-Fi to download” (Thanks, Luis Zhu). It’s possible the option is greyed out because the software needs updated maps to work. There are no reports yet of what happens when the navigation map is downloaded.
We previously reported that FSD was on hold in China, even after Tesla received approval to start testing FSD in China. This flip-flopping is interesting but could be due to regulatory issues between China and Tesla regarding data collection and where the data is stored. Now that the button is in the UI – Tesla is clearly confident that it either has received approval or will in short order.
It certainly appears that Tesla is going to be opening up FSD in the region fairly soon. It’ll be interesting to see if Tesla uses the same Safety Score feature they used in the U.S. when choosing drivers to beta test the program.
Elon Musk previously mentioned that FSD (Supervised) would be rolling out to global markets, including Europe and China, as Tesla received approvals from governments in those nations.
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