Chinese authorities have called on major electric vehicle (EV) manufacturers, including BYD, to halt aggressive price wars that are threatening the industry’s stability, according to a recent meeting in Beijing. Reported by Bloomberg the Ministry of Industry and Information Technology and other regulatory bodies hosted the gathering, highlighting concerns over unsustainable pricing and its ripple effects on the EV supply chain, signaling a push for self-regulation among automakers.

Regulatory Push for Stability in China’s EV Sector

The meeting, attended by senior executives from over a dozen manufacturers like BYD, Zhejiang Geely Holding Group Co., and Xiaomi Corp., addressed the long-running price war in China‘s EV market. Officials urged companies to “self-regulate” and avoid selling vehicles below cost or offering steep discounts, practices that have led to financial strain across the sector. They also raised concerns about “zero-mileage” cars—new vehicles that fail to reach consumers and are offloaded to supply chain partners or dealers, further clogging the market.

This regulatory intervention comes as BYD, a leading EV maker, recently slashed prices by as much as 34%, prompting criticism from industry bodies and state media. The China Automobile Manufacturers Association noted that such moves have sparked a “price war panic,” plunging the sector into a “vicious cycle” and threatening supply chain security while compressing corporate profit margins.

Byd Faces Heat: China Calls Out Ev Giants, Price War Warning

Financial and Operational Challenges for EV Makers

The price war has taken a toll on the supply chain, with automakers delaying payments to suppliers by months. A report by GMT Research estimates BYD’s true net debt at 323 billion yuan—equivalent to $45 billion—far higher than the officially reported 27.7 billion yuan ($3.9 billion) as of June 2024, largely due to delayed payments and related financing. This practice, often dubbed “quasi-debt financing,” has drawn scrutiny for masking the company’s financial strain while pressuring suppliers.

Operationally, the focus on price cuts has led to concerns about quality. State media outlets like Xinhua and People’s Daily have warned that low-priced, low-quality products could damage the global reputation of “Made-in-China” EVs, especially as Chinese brands expand internationally. The Ministry of Commerce, in a recent briefing, emphasized working with other departments to “ensure fair competition and promote healthy development” in the industry.

Industry Response and Future Outlook

Not all manufacturers are on board with the price war. A representative from Geely cited Chairman Li Shufu, who stated that the company “resolutely rejects price wars and will compete on technology and its values.” Meanwhile, BYD and Xiaomi did not respond to requests for comment, leaving their next steps unclear. Without mandatory directives, the effectiveness of these verbal warnings remains uncertain, especially as competition in China’s EV market—projected to exceed 9 million vehicle sales in 2025—continues to intensify.

For EV enthusiasts and owners, this development signals potential shifts in pricing and availability. While lower prices have made EVs more accessible, the push for stability could lead to fewer discounts but potentially better-quality vehicles. On the flip side, if manufacturers heed the call to prioritize technology over price, innovations in battery range, charging speed, and vehicle durability could accelerate, benefiting consumers in the long term.

A Balancing Act for China’s EV Industry

China’s EV sector, a global leader, faces a critical juncture. Balancing affordability with sustainability is key to maintaining its edge, especially as brands like BYD expand into markets like the U.S. and Europe. For now, the government’s call for self-regulation aims to steer the industry away from financial brinkmanship, but only time will tell if automakers can shift gears without stalling growth.

Photo courtesy of Geely, BYD and Latamobility.