The China Association of Automobile Manufacturers (CAAM) is calling on automakers to steer clear of disruptive price wars in the country’s rapidly expanding new energy vehicle (NEV) market. Despite NEVs accounting for over 40% of new car sales in China, the industry is grappling with decreasing profitability—a trend the CAAM attributes to “involution-style” competition and disorderly price cuts.
On May 23, a major carmaker slashed prices sharply, a move that was quickly echoed by other manufacturers. This sudden shift ignited market panic and prompted concerns about the long-term health of the industry. The CAAM warns that such aggressive pricing strategies are squeezing profit margins, undermining service quality, and could derail the industry’s sustainable development. Moreover, these practices threaten consumer rights and could lead to broader safety issues.
Continuous investment is vital for supporting products and driving innovation in the NEV sector. However, the CAAM emphasizes that disorderly competition disrupts business operations and jeopardizes the stability of industrial and supply chains, potentially trapping the industry in a vicious cycle.
The association urges all companies to adhere to fair competition principles. Leading enterprises, in particular, should avoid strategies that aim to monopolize the market by squeezing out competitors. Beyond lawful price adjustments, firms must refrain from selling products below cost, engaging in deceptive marketing, or any actions that disrupt market order and harm the fundamental interests of the industry and consumers.
In a bid to restore stability, the CAAM is encouraging companies to conduct self-inspections to ensure compliance with national laws and regulations. By fostering a healthy competitive environment, the industry can continue to innovate and thrive, benefiting both businesses and consumers alike.
