Don’t fight forces, use them!

Munich, March 2024

Don't fight forces, use them!

Munich, March 2024

ffective Pricing Strategies amidst the Global BEV Price War.

Executive Summary

Today, the global automotive industry is faced with an unprecedented realm of pricing challenges characterized by ever escalating price wars that threaten both market stability as well as profitability. In our most recent study, we have analyzed the price developments of the BEV used car market in Europe and its impact on the new car market.

This article will delve deeper into the global trend of falling car prices (new and used) with particular emphasis on effective pricing strategies. Our main aim will be to provide a strong framework for OEMs, captives, leasing companies and everyone involved in car (re-)sale to respond effectively against these price wars using a set of proven levers. We recommend promptly setting up a cross-functional task force to develop and swiftly implement customized pricing strategies suited to different vehicle ranges and models to best profit from the given circumstances during price wars.


The global automotive industry is at an inflection point where BEV price wars are active across regions. Triggered by the price cuts that Elon Musk does at Tesla and fueled by discontinued subsidies in countries like Germany and France, this price war has reached substantial proportions. Tesla has slashed new car prices for their models between 2022 and today by between 16% (Model 3) and up to 33% (Model X) in the US.


Source: Berylls Strategy Adivsors, Car and Driver

Discounts and price cuts are back! After a longer period of high prices due to demand bottlenecks, BEV discounts are about to become the new normal. This is not affecting single brands or segments but can be observed across the board.


Source: Berylls Strategy Advisors

Once a price war has started, it is obviously difficult to act against or even stop it. The trick is to make the best out of given circumstances short-term and to execute the most effective levers out of the pricing toolbox. By doing so, companies will profit from additional effects on profitability despite the negative effects the price war will have without a doubt.

Anatomy of price wars

A price war represents a highly competitive situation in the market. It occurs when a business reduces its prices to attract more customers and increases its market share, leading other competitors to lower their prices as well, to remain competitive.


BEV market is experiencing decreasing prices due to higher sales pressure. The risk of a price war with its vicious cycle is rising. Various opportunities and threats must be traded off precisely by the OEMs.

Source: Berylls Strategy Advisors, Autovista24, part of Autovista Group

Like conflicts among nations, price wars often stem from escalating tensions or significant disparities within the market landscape. The onset of such wars is almost inevitable once these conditions are in place. Price wars do not emerge spontaneously but are the result of various contributing factors and certain triggers:

1. High Market concentration

In industries where a few large corporations dominate, alongside a considerable number of smaller entities, the risk of a price war escalates.

2. New Entrants

To prevent new competitors from gaining a foothold, existing businesses might reduce their prices, thereby intensifying the competition over pricing.


When consumers frequently switch providers seeking lower prices, companies might engage in fierce price reductions to attract and keep these price-sensitive shoppers.


Overly optimistic growth expectations can prompt managers to compete aggressively for a larger share of the market.


When offerings are seen as similar, there's a higher tendency towards price wars, as with limited options for differentiation, businesses might lean towards cutting prices.


Companies weigh the potential gains from lowering prices against the risk of competitive retaliation. This balance influences whether they decide to lower prices or avoid doing so.

These elements are reliable indicators of the potential for price wars to erupt. In automotive, it is a combination of different triggers, that lead to the current price war. Market concentration is still high, although the number of new OEMs especially from China has considerably lowered it. New entrants are setting new price levels for certain vehicle ranges that are much lower than what was the case before, thereby educating consumers towards low prices. The expectation of high market growth might have influenced the decision of Tesla to lower prices, expecting to gain market share. The same rationale might hold true for especially Chinese manufacturers. Subsidies are being reduced or stopped etc.

Understanding the reasons behind a price war is important as to some extend it influences the possible reactions on the pricing side.

Pricing approaches to price wars

During a price war, businesses often face significant pressure to lower prices to maintain competitiveness, which can lead to a race to the bottom and potentially harm long-term profitability. However, there are several pricing approaches that companies can adopt to navigate through a price war effectively without solely relying on cutting prices.

Choosing the right strategy depends on the company’s market position, product or service offerings, customer base, and overall business goals/ pricing strategy. Before deciding on a set of pricing approaches, the pricing strategy must be clearly defined and the focus on volume vs. margin determined for those products in focus at least.

It’s also crucial to monitor the effectiveness of the chosen strategy and be prepared to adjust as the market conditions change.

Here are the 10 most suitable pricing strategies to use during price wars (of course not only then):

10 most suitable pricing strategies to use during price wars (of course not only then).

Value-based pricing

Emphasize customer value; justify higher prices for select segments.

Instead of competing on price, focus on the value offered to customers. This involves understanding what aspects of your product or service are valued by your customers and setting prices based on that perceived value. By differentiating your offerings, you can justify maintaining higher prices at least for certain parts of the portfolio and selected customer segments.

Premium Pricing

Set higher prices for unique features or superior quality.

Maintain a premium pricing strategy for products or services that offer unique features, superior quality, or exclusive benefits not available from competitors. This strategy relies on branding and market positioning to appeal to customers who are willing to pay more for perceived higher value. This can for example be applied to certain accessories or parts of a vehicle range.


Combine products for increased perceived value and sales.

Combine products or services into a package deal at a price lower than the total of each item sold separately. This can increase the perceived value for customers and discourage direct price comparisons with competitors' individual products. Bundling can e.g. be done for cars and service packages (higher margin business).

Typical examples are a bundle of car plus wallbox plus installation or car plus voucher for free power.
Penetration Pricing

Temporarily lower prices to gain market share quickly.

Temporarily lowering prices below competitors to gain market share and attract price-sensitive customers. Once a solid customer base is established, prices can be gradually increased. This strategy requires a careful balance to avoid long-term profit erosion. It can make sense in a situation where a bigger cost advantage exists compared to competition.

Cost-plus Pricing

Price products to cover costs and ensure profit.

Ensure pricing covers costs and includes a margin for profit. This strategy is more about internal cost management than market competition, but it can help avoid selling at a loss during a price war.

Psychological Pricing

Employ tactics to make prices more appealing.

Utilize pricing tactics that make your prices appear more attractive, such as pricing products at $999 instead of $1.000. This can make your offerings seem cheaper without significantly reducing the price. Rounding logics can of course be applied to accessories as well. There are further psychologically driven pricing tactics that can be applied such as “reason discounts”, “prestige prices”, “versioning” etc.

Dynamic Pricing

Adjust prices based on real-time market conditions.

Adjust prices in real-time based on market demand, competitor prices, and other external factors. This requires sophisticated pricing algorithms and data analysis but can help you stay competitive without initiating a downward price spiral.

Loss Leader Strategy

Offer discounted items to attract customers; boost sales of higher-margin products.

Offer one or more products at a loss or very low margin to attract customers into the retail store or onto the platform with the expectation that they will purchase other, higher-margin items.

Customer Loyalty Program

Retain customers with rewards and incentives.

Implement or use existing programs that reward repeat customers with discounts, exclusive offers, or other perks. This encourages customer retention and can help maintain sales volumes without directly engaging in price cuts.

selective price cutting

Lower prices strategically to remain competitive.

Instead of across-the-board price reductions, selectively lower prices on key items that are most sensitive to competition. This can be an effective way to remain competitive on hot-ticket items while maintaining margins on others.

Thorsten Lips


Christopher Ley


Applying these strategies can be complex as there´s no silver bullet in pricing, but it is rather a combination of different approaches that will lead to success.

Different strategies can be necessary for certain parts of the portfolio as well as for the regions or countries. Products are positioned differently, and the strategy might as well be. The regional focus of pricing strategies as well depends on the targets that should be achieved. Local adaptation of measures such as bundling or psychological pricing must be done because of market and customer habits.

What to do next?

From our many years of experience, there are three main mistakes that companies make during price wars:

1. The “do nothing” mistake: Price wars are an uncomfortable situation for managers. You know that you are losing substantial profit, you cannot really stop the price war, nor do you know when it will end. Quite often the reaction is to try and not make it worse by any actions for which the outcome is unknown. Managers simply sit, observe, and wait until the price war is over.

2. The “we must act not, it is serious” mistake: During price wars, companies start losing profits immediately and the effect is getting bigger every day and week. All reports show negative deviations and pressure will be high for management to act. The pricing function in automotive OEMs, captives, leasing companies etc. is still underdeveloped in many cases. Data and tools are not sufficient, processes rather manual than digital and the like. For price war situations often there´s no toolbox existing, that pricing managers can make use of. The result often is a hectic and not well thought about approach with measures that are more driven by pressure than based on a strategy.

3. The “lone wolf” mistake: Of course, there are people that know what to do or at least believe they do. This sometimes results in isolated measures for e.g. a single product, region, or the like. The problem with this is, that spill-over effects to other products or customer segments are not considered. The complexity of pricing measures is simply underestimated because one is looking at a local optimum. The result can sometimes be the opposite of what you wanted to achieve.

Those mistakes must clearly be avoided and there´s a recipe for how to make sure that price wars are being managed in a positive way.


Pricing task force

In a first step, we recommend businesses to build a pricing task force for the immediate management of counter actions in a price war. Why task force? Because it is necessary to act quickly and involve resources and data from different departments to work systematically and with high pressure to develop and implement solutions. And because a local optimum of one department is often not enough, but a more global optimum is required.

The task force must identify the most important fields in which measures mustbe implemented first. This can be parts of the portfolio, regions, sales channels,or the like. For each priority field, the situation is analyzed, including competitor activities, purchase behavior of clients etc. Based on this, a pricing strategy is developed, considering volume and profitability aspects. Financial targets must be defined, in a worst-, realistic- and best-case scenario. Based on this, a team of experts from different functional areas such as sales, marketing, pricing, financeetc. will develop measures and evaluate their effect before starting to step-by-step implement. Dedicated reports from the markets in focus will make sure that effects in the market become visible and measures can be adjusted accordingly.



As a second step (or in parallel, depending on resource availability), the taskforce work must be institutionalized. As part of the existing pricing governance and operating model, the necessary elements for price war situations must be added.

The most important elements are to define committees that will be put in placewith a clear governance and a pricing toolbox for the price war situation as well as a dedicated process.

With these two steps, maneuvering through a price war can be done systematically and with maximum impact.

Nota bene: It is obviously the better option to avoid price wars if possible and to make sure that an existing price war can be ended quickly, for example by sending out appropriate communication into the market.


With all these price wars, the global automotive industry is passing through challenging times with threats to decades‘ traditional business models. However, with a systematic and comprehensive approach towards pricing and market positioning OEMs, captives, leasing companies and everyone involved in car (re-)sale can ride the tide in these turbulent times. Formulation of a dedicated task force is thus an important first move to make use of data and pool resources across functions to make better and faster decisions and focus on rigid execution.

Thorsten Lips

Thorsten Lips (1972) is a partner at Berylls Strategy Advisors. He began his career as a management consultant at PricewaterhouseCoopers Düsseldorf in 1998. After spending six years at Malik Management Centre in St. Gallen, Switzerland, he took the cross-industry, global responsibility for Pricing, Sales, Service and Marketing as a partner at Horváth. At Berylls, his area of expertise is Pricing & Revenue Management. This encompasses classical topics like new- and used-car pricing, aftersales pricing and the like. In addition, he is an expert in innovative Pricing and Revenue Management approaches for digital products and services as well as in the field of data-driven Pricing.

Industrial engineering and management studies at the Technical University of Ilmenau and the Technical University of Darmstadt.