China urges carmakers to end brutal electric vehicle price war

Chinese authorities have issued a sharp warning to automakers to cease their aggressive price-cutting tactics, as a wave of discounting continues to shake the country’s highly competitive electric vehicle (EV) market.

The Ministry of Industry and Information Technology (MIIT) urged manufacturers to avoid “brutal” pricing wars that risk destabilizing the industry, Caliber.Az reports via foreign media.

The appeal follows an intensification of discount campaigns that began in early 2023 and show little sign of abating. The most recent escalation came last week when BYD, China’s leading EV producer, unveiled a broad package of financial incentives affecting more than 20 models. The move quickly triggered similar responses from competitors including Geely and Chery. Some of BYD’s offers, which include subsidies for trading in older vehicles, could bring the price of its compact electric hatchback, the BYD Seagull, down to 55,800 yuan (about $7,750).

In response to the spiraling discount race, the MIIT announced it will coordinate with law enforcement agencies to investigate and penalize unfair competition. The ministry pledged new regulatory actions to curb predatory pricing and protect the long-term health of the sector. The ministry stated that there are no winners in a price war, let alone a future, emphasizing its commitment to protecting consumer interests and promoting the sustainable development of the industry. The China Association of Automobile Manufacturers (CAAM) echoed the ministry’s concerns, calling on carmakers to respect fair competition rules and reject monopolistic practices. 

The association revealed that the latest round of undercutting was sparked by deep price cuts from an unnamed automaker on May 23, which sent shockwaves across the market. CAAM stated that companies are not permitted to sell products below cost unless such actions comply with legal provisions, warning that these practices could lead to long-term harm to brand value and consumer trust.

By Naila Huseynova