(Yicai) July 15 -- China’s joint-venture auto manufacturers, such as FAW-Volkwagen Automotive which is a collaboration between China’s FAW Group and Germany’s Volkswagen, are redoubling their efforts to upgrade the smart functions of their gasoline-powered cars and to trim prices as new energy vehicles start to compete with them in the luxury vehicle sector.

Since the end of last year, NEVs, such as Xiaomi’s first electric car, the SU7, and Huawei Technologies and Chery Automobile’s Luxeed S7, have begun to enter the medium and large sedan sector. Before this electric car makers tended to focus on small cars with a price tag under CNY150,000 (USD20,600) and premium vehicles priced over CNY300,000.

This is putting pressure on the price of fossil fuel-powered luxury cars. For example, German vehicle manufacturer Audi’s A4L now has a starting price of under CNY200,000 (USD27,500).

FAW-Volkswagen recently rolled out a new generation of its Magotan marque, which features upgraded specifications and a lower starting price of CNY179,900 (USD24,700), CNY7,000 (USD964) less than previous models.

The Changchun-based JV has linked arms with Huawei, drone maker DJI Technology, artificial intelligence developer iFlytek, and US chip manufacturer Qualcomm to develop the latest Magotans, which boast multiple screens and three-and-a-half times more computing power.

There has been a shift in consumer patterns, which has led to large-scale discounts of luxury cars, according to a report from the BitAuto research institute. Now it is not just businesses and government agencies, who put a lot of value on the brand, that are buying medium-sized and large sedan cars, but also individual buyers who are more interested in cost-to-performance ratios.

However, NEVs will continue to encroach on the market share of gasoline-powered autos as price cuts on fossil fuel-powered cars are not having the desired effect, Cui Dongshu, secretary general at China Passenger Car Association, wrote in a recent article.

Editors: Liao Shumin, Kim Taylor