China's prominent electric vehicle (EV) manufacturers BYD, Li Auto, Nio, and XPeng are gearing up to announce their February delivery figures as the price war intensifies in the world's largest car market. Despite concerns raised by President Joe Biden regarding the entry of software-laden Chinese vehicles into the American market, Chinese EV stocks rallied on Thursday. However, it is important to note that these Chinese manufacturers do not currently sell their electric cars in the United States.

BYD, in particular, is reportedly seeking a plant site in Mexico and has been successfully selling electric buses in the U.S. market for several years. The monthly sales data for February are expected to reflect a significant drop due to the long Chinese New Year holiday. It is worth mentioning that Tesla does not disclose its monthly sales figures.

In terms of stock performance, BYD's U.S.-listed shares showed a slight increase in the stock market, whereas Nio and XPeng experienced a rally of around 6% to 8%, nearing their 52-week lows. Despite BYD's stock rebounding from a recent low, it is facing resistance at its 50-day moving average. All three EV stocks continue to see a decline in their 50-day averages below their 200-day lines, indicating a negative trend. Li Auto, on the other hand, witnessed a stock gain on Thursday, bolstered by a strong fourth-quarter earnings report. Although its 50-day average remains below the 200-day line, it is starting to show signs of an upward trajectory.

Recently released industry data suggests a significant slump in electric vehicle sales in China during the first four weeks of February due to disruptions caused by the Chinese New Year break. Retail sales of passenger electric cars dropped by 22% compared to last year and declined by 44% compared to last month. BYD and other major EV manufacturers experienced a similar decline in sales during this period.

In an effort to stay competitive, BYD initiated a price war by reducing the prices of its revamped Han and Tang EV models, along with other models. These upgrades include enhanced driver-assist features, further intensifying the competition in both the budget and mid-to-high-end EV markets. Tesla, as a major competitor, had already reduced the prices of its Model Y and Model 3 in January, with further discounts offered on the Model Y on February 1st. While cheaper batteries can help offset some of the price cuts, BYD and other automakers may face margin pressures. However, BYD's expanding export market could provide a boost in sales and margins.

In other news, Li Auto is set to unveil its first purely battery-electric vehicle, the Mega minivan, on Friday. The EV startup reported strong preorders and aims to position the Mega as a premium pure EV. Li Auto, known for its extended-range electric vehicles, plans to launch updated versions of its current models, L7, L8, and L9, in 2024. The company, focused on the premium market, continues to outperform its startup peers Nio and XPeng, posing an increasing threat to industry giants like BYD and Tesla.

Li Auto's model, the L7, is anticipated to compete with Tesla's Model Y in China. In a recent video, Li Auto showcased a comparison of the upcoming Mega EV's range with that of the Model X. Notably, Tesla currently produces the Model 3 and Model Y in China but does not manufacture the Model S and Model X in the country.

As these Chinese EV manufacturers gear up to reveal their February delivery figures, industry analysts eagerly await the results, expecting a challenging month due to the Chinese New Year holiday disruptions.