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Beijing, November 24 (TMTPOST) — BYD Company Limited (002594.SZ/01211.HK), a leading Chinese automotive maker, announced Wednesday that it will increase guidance prices of certain new energy vehicles (NEVs), despite price cuts by other dealers like Mercedes-Benz and Tesla.

Starting from January 1, 2023, prices of brands, including Wangchao, Haiyang and Tengshi, will go up by 2000 yuan ($280) to 6000 yuan ($840). The price hike was due to rising costs of raw materials and China’s upcoming termination of subsidies for the purchase of new-energy vehicles.

This was not the first time that the Chinese government lowered the subsidies on NEVs. In the beginning of this year, subsidies for battery electric vehicles with a range of up to 400 kilometers were cut to 12,600 yuan, down by 30 percent. And the subsidy for plug-in hybrids was slashed by 2,000 yuan to 4,800 yuan. The current subsidy program will expire by the end of this year.

Although most electric vehicle makers chose to raise prices after the first cut in subsidies, many of them went in the opposite direction during the past month. Tesla lowered the pricesof its Model 3 and Model Y lineup in China by up to 37,000 yuan on October 24. Two weeks later, the company raised insurance incentives to further spur purchases. Following Tesla, Chinese manufacturers also joined the price war. Leapmotor (09863.HK) launched a discount of up to 12,000 yuan, XPeng (NYSE: XPEV/09868.HK) cut prices by up to 20,000 yuan, and Huawei-backed AITO introduced price cuts of up to 30,000 yuan.

Such price competition was brought by an economic downturn in the NEV market. According to the China Passenger Car Association, retail sales of NEVs in October 2022 fell by 9.2 percent month-on-month. Although they increased by 74.9 percent compared with same period of last year, it was the lowest year-on-year growth rate.

One of the reasons that BYD could buck the trend was an increase in sales volume. In the first ten months of 2022, BYD sold 1.4 million NEVs, representing a year-on-year increase of 239 percent. By increasing prices, the company hoped to increase profits per vehicle.