Chinese Regulators Urge to End “Price War” in the Electric Vehicle Market
The boom of the electric vehicle market in China has been accompanied by a fierce price war among manufacturers. This has led to a significant increase in sales but has also created risks for market stability. The country’s government is now calling for an end to excessive competition.
Representatives of automakers were recently summoned to Beijing, where they were instructed to “self-regulate.” Regulators are using the term “involutionary competition” to describe a situation where the struggle for market share becomes self-destructive.
Manufacturers’ Reaction
Xpeng CEO He Xiaopeng expressed doubts about the possibility of stopping the price war. He stated that current events are just an “appetizer” for more intense competition in the next five years.
Competition will become even fiercer in the next five years
Nomura experts confirm this view, pointing to an oversupply of cars in the market. Over the past two years, the average price of a new car in China has fallen to approximately 165,000 yuan ($22,900).
The price war has contributed to the growing popularity of electric vehicles among Chinese consumers, but prolonged price reductions could have negative consequences for the industry. Some manufacturers are already facing declining profitability, which could affect investments in the development of new technologies. The government is trying to find a balance between supporting innovation and protecting market stability.