Beijing is stepping up efforts to contain a worsening price war in China's electric vehicle (EV) industry, as destructive discounting threatens market stability and broader economic health. In response, top regulators, including the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC), and the State Administration for Market Regulation (SAMR), have launched a joint initiative aimed at curbing irrational competition and restoring order across the sector.
Government steps up oversight
Two high-level meetings on July 17 and 18, 2025, signaled intensified government oversight. On July 17, the Fourth Central Guidance Group — a Party oversight body supervising MIIT — conducted a field study at the China Association of Automotive Manufacturers (CAAM) to examine growing concerns over irrational competition in the EV space. Senior executives from BAIC Group, BYD, and other major automakers participated in the closed-door session.
Che Jun, deputy head of the Central Guidance Group, stressed the urgent need to address abnormal competition in the EV market, calling it a recurring issue that demands sustained structural solutions, as SCMP and Sina report. He urged leading automakers to set the tone by competing legally and rationally, warning that unchecked price wars could undermine macroeconomic stability and fuel deflationary pressures.
Regulators target price monitoring, supply chain stability, and battery standards
The following day, MIIT Minister Jin Zhuanglong led a summit with executives from 17 major automakers, CAAM, and regional regulatory bodies to map out measures for stabilizing the EV market. The meeting introduced four key directives aimed at addressing short-term price volatility and promoting sustainable industry development:
1. Stronger price monitoring and supplier payment discipline
Regulators called for enhanced price tracking of new energy vehicles (NEVs), random product quality inspections, and shorter payment terms to ease financial strain on suppliers and contain supply chain risks.
2. Long-term market reforms
Officials advocated for building a unified national auto market backed by policy incentives to boost industrial upgrades and encourage coordinated development across regions.
3. Accelerated standards and technical barriers
Authorities plan to expedite new standards for EV energy efficiency, battery recycling, and safety compliance, raising technical thresholds and enhancing policy implementation across the industry.
4. Promoting industry self-regulation and fair competition
The government urged automakers to uphold fair and honest competition while tasking CAAM and industry bodies with curbing smear campaigns, disinformation, and online sabotage that damage industry reputation and consumer confidence.
Market pressure mounts on profitability
Officials emphasized that a stable, competitive environment is vital as China's EV sector scales further. Analysts view the regulatory crackdown as a response to deepening "involution" — hyper-competition that erodes margins and threatens the industry's global competitiveness.
From January to May 2025, EV sales grew 11.7% year-over-year, but revenue rose just 7%, and net profits dropped 11.9%, a clear indication that aggressive price cuts are eating into margins and stalling profitability.
Industry analysts argue that with China's EV technology now relatively mature, automakers should shift focus from price wars to meaningful innovation and differentiation to meet evolving consumer demands and preserve pricing power.
Analysts note that while the new directives mark a significant regulatory shift, stricter standards and enforcement could squeeze out underperforming or smaller players. Over time, this may boost industry consolidation and strengthen China's global EV competitiveness.
Article edited by Jerry Chen
