BYD and SAIC Push Suppliers For 10% Price Cut In 2026

Chinese NEV-making behemoth BYD is reportedly seeking a 10% price cut from its suppliers beginning in Jan 2025, indicating the car maker bracing for a more intense price battle next year. This was confirmed from a leaked email allegedly from BYD on this demand.

Li Yunfei, BYD's Public Relations and Branding Director, meanwhile took to China's Weibo stating that supplier negotiations are common in the auto business. He emphasised that the proposed reductions are objectives rather than a mandate, leaving room for negotiation.

This move underscores BYD's strategic positioning for additional price revisions in 2024, following a two-year pricing battle in China's vehicle market. Competition has led to multiple industry consolidation, which has had a significant impact on smaller firms.

BYD remains a dominant player, leveraging price wars to win market share and push weaker competitors out. This year-to-date, the company has sold over 3.2 million plug-in hybrid and electric vehicles, with revenue surpassing Tesla in the most recent quarter.

The manufacturer is on course to sell over 4 million vehicles by the end of the year, cementing its status as China's best-selling car brand.

Meanwhile, SAIC's Maxus division contacted suppliers on Nov 25 and requested a 10% cost cut, according to CarNewsChina.

However, in SAIC’s case the company was upfront to outline a five-pronged approach to its suppliers to achieve this:

1. Optimized Raw Materials: Suppliers are encouraged to find cost-effective procurement solutions or innovate to reduce material usage.
2. Process Improvements: Suggestions to enhance efficiency and minimize waste are welcomed.
3. Value Engineering (VAVE): Suppliers are urged to collaborate with SAIC in design and optimize part costs using their expertise.
4. Logistics Optimization: Proposals to streamline logistics, reduce packaging costs, and enhance system efficiency are encouraged.
5. Long-Term Partnerships: Strengthening collaboration for better future cost planning is a priority.

Both BYD and SAIC’s cost-cutting efforts reflect the mounting pressure on automakers to remain competitive in China’s fiercely contested EV market. Ultimately, all these cost cutting due to competition will only mean lower priced vehicles for the end consumer.