• The Chinese electric-vehicle maker Xpeng launched a low-priced EV.

• The cheapest version of that car is nearly half the price of Tesla's Model 3 in China.

• Elon Musk's car company faces stiff competition in China from a wave of cheap, tech-heavy local EVs.

One of Tesla's Chinese rivals launched a low-priced electric vehicle with self-driving tech — and it shows just how big a challenge Elon Musk faces in staying competitive in the world's largest EV market.

On Tuesday, Xpeng launched the Mona M03, an electric car with a starting price of 119,800 yuan, or about $16,800.

The EV is available in three models, including a "Max" version with autonomous-driving features that costs 155,800 yuan, or about $21,900.

The cheapest M03 model is just over half the price of Tesla's most affordable car, the Model 3, which starts at about 231,900 yuan in China.

Tesla has repeatedly cut prices in China over the past year as it tries to keep up with its local rivals. It's said to be close to gaining approval to sell its Full Self-Driving tech in the country.

Tesla faces brutal competition from Chinese companies capable of matching its tech-heavy electric cars while undercutting it on price.

Xpeng's M03 joins a crowded market that includes the smartphone maker Xiaomi's SU7, a smart car with an estimated 500-mile range and a price tag of about $30,000.

The industry leader BYD, which briefly overtook Tesla as the world's largest producer of EVs in late 2023, has also slashed prices this year. In March, it cut the sticker price of its Seal electric sedan by 10,000 yuan, to 179,800 yuan.

The premium-EV giant Nio, meanwhile, is planning to launch an affordable-EV brand called Onvo in China that's set to compete directly with Tesla's Model Y.

The L60, the first car in the Onvo range, would be about $5,000 cheaper than the Model Y and offer drivers access to Nio's network of battery-swapping stations, which the company says cuts charging times to as little as three minutes.

Nio, BYD, and Xpeng also advertise their versions of Tesla's driving-assistance tech. BYD is racing to add AI features to its vehicles to appeal to tech-savvy Chinese consumers.

These Chinese EV companies are also being challenged by growing competition in the region and pressure to compete on price.

Musk likely hopes that Tesla's robotaxi, which he's reportedly keen to launch in China, can give the US automaker an edge.

Still, a victory for Tesla in the most cutthroat EV market is far from assured.

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Chinese EV giant BYD posts 24.4% rise in profit

Leading Chinese automaker BYD's sales were boosted by strong demand for electric cars (STR)

Leading Chinese automaker BYD posted on Wednesday a 24.4 percent rise in net profit for the first half of 2024, boosted by continuing strong demand for electric cars in its home and overseas markets.

The company posted a net profit of $1.91 billion in the January-June period, up from $1.54 billion in the same period last year, according to results published at the Hong Kong Stock Exchange where BYD is listed.

The firm said sales during the period stood at $42.3 billion, up 15.8 percent year-on-year.

The Shenzhen-based company -- which adopts the English slogan "Build Your Dreams" -- is the most prominent EV manufacturer in China, the world's largest automotive market.

Leaders in Beijing are aiming for car sales to be mainly made up of electric and hybrid models by 2035.

In July, such vehicles accounted for more than half of all domestic sales, passing the threshold for the first time, according to the Chinese Association of Automobile Manufacturers.

Generous government subsidies initially helped sales take off -- but the policies were phased out in late 2022 and the market now appears to be reaching maturity.

Local EV firms have since been locked in a cut-throat price war as they fight to remain competitive, weighing on their profitability.

BYD has "effectively dealt with challenges brought by intensified industrial competition", it said in the filing.

- Overseas challenges  -

BYD and other Chinese EV giants have accelerated overseas expansion in recent years, despite concerns in Western countries that local markets will become flooded with imports at prices they view as artificially low.

The European Union has alleged that Beijing's automotive subsidies have given Chinese firms an unfair leg up in foreign markets, distorting competition and harming the competitiveness of European automakers.

Earlier this month, Brussels released a draft plan to impose tariffs of up to 36.3 percent on Chinese EVs -- a measure that will become permanent in October unless a deal is reached with Beijing.

The United States said in May that it would significantly raise customs duties on Chinese EVs to 100 percent.

Canada also announced a 100 percent tariff on Monday, accusing China of "not playing by the same rules as other countries" in areas such as environmental and labour standards.

BYD has nonetheless been ramping up globalisation efforts, with plans to open factories in Hungary and Turkey.

Originally specialising in the design and production of batteries, BYD diversified into the automotive industry in 2003.

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China's BYD to use Huawei's advanced autonomous driving system in off-road EVs

Chinese electric vehicle (EV) giant BYD has signed an agreement with Huawei to use the Chinese tech conglomerate's advanced autonomous driving system in its off-road Fangchengbao EVs, Huawei said on Tuesday.

The Bao 8 SUV under the Fangchengbao lineup will be the first BYD model to sport Huawei's Qiankun intelligent driving system and go on sale later this year.

The tie-up follows BYD's efforts to move upscale as it aims to increase the sales of its premium brands of Denza, Fangchengbao and Yangwang to improve profitability. The three brands accounted for just 5% of its total sales in the first half, according to data from China Association of Automobile Manufacturers.

The use of Huawei technology also highlights pressure on the Chinese EV champion to play catch-up against rivals in beefing up smart driving configuration with in-house development.

BYD has dominated the EV market with a significant cost advantage thanks to its so-called vertical integration strategy by making the key components such as batteries on its own.

The company has been investing heavily in developing its own advanced driver-assistance system (ADAS) by hiring thousands of engineers since last year. It still relies on external suppliers for such intelligent features in upmarket models, including using Momenta ADAS in its Denza cars.

The partnership with Huawei also reflected the growing presence of the Chinese tech company in the EV sector as a major supplier of ADAS. Volkswgen's Audi will also use Huawei's ADAS in its EVs for the China market.

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