EV manufacturers slash prices to keep up with Tesla

Yahoo Finance’s Pras Subramanian joins the Live show to discuss how EV manufacturers are reacting to Tesla’s recent price cuts.

Video transcript

RACHELLE AKUFFO: Right, well, EV manufacturers are feeling the fallout from a Tesla-driven price war. China's BYD erased $18 billion in value the past month. So Pras, what does that mean for BYD's outlook.

PRAS SUBRAMANIAN: Well, I guess it's more of a China story when you talk about BYD and not so much a Tesla story. There's a lot of competition there in the lower end, the cheap EV, hybrid space that BYD operates in. And BYD had a good year-- a good-- end of good February last month. Their sales were up 87% year over year.

So they're doing well. It's just the fact that their stock price has been getting hit. A lot of it is peculiarities of the Chinese stock market. Not exactly in the best spot right now-- you also talk about Buffett-- Warren Buffett, that is, unloading shares of BYD in the last few months. That's sort of not helping the matters there.

So BYD sort of feeling a little bit of a pinch there in the stock price. But from an operations point of view, they're still selling a lot of cars. They may have had to discount some of them to kind of compete. But if you look at it from a point of view of competition, Tesla, in China at least, operates it at much higher-end, almost luxury market. So they're sort of operating there. They're cutting prices there to deal with NIO and other brands like that. Whereas BYD is still growing share but at a cheaper-- hybrid cars, smaller EV sort of market there for them.

RACHELLE AKUFFO: So Pras, do you think it will make it difficult if Tesla does decide to come out with a much cheaper model then to compete with the BYDs of the world?

PRAS SUBRAMANIAN: Well, I think that's going to be-- that's going to happen, right? I think we're going to see that happen with the sub-$25,000 car that may come-- I mean, it may come to the US-- I think not at sub-25 but around 25 to 30-- maybe even cheaper in China with smaller batteries. I think that's the goal for Tesla is to keep growing their sort of footprint, and not at the expense of the higher-end vehicles.

They want to grow that lower end, where they can actually-- maybe they will be taking it to BYD. But in China, you have more-- kind of a more mature market there for the cheaper, smaller cars. We don't have that in the US here for cars of like 100-150-mile, around, range. It's not really a thing we do here. But in China, it's a big deal. So I think that BYD might be looking over their shoulder, thinking of maybe Tesla'll be coming in a few years.

RACHELLE AKUFFO: Certainly one to watch indeed. Pras Subramanian, thanks so much.