A employee checks a finished vehicle on the production line for electric vehicle maker Zeekr at its factory on May 29, 2025 in Ningbo, China.
Kevin Frayer | Getty Images News | Getty Images
BEIJING — As China’s electric vehicle price competition intensifies, its top leaders have sounded the alarm with high-profile calls to halt excessive competition, known colloquially as “neijuan” or involution.
While the buzzword has taken on various meanings in China to imply a race to the underside, the term was mentioned in Chinese Premier Li Qiang’s annual work report in March. The market regulator’s meeting last month also called for “comprehensively rectifying ‘involutionary’ competition.”
Earlier this week, senior executives of several Chinese EV makers were summoned to Beijing to “self-regulate,” Bloomberg reported.
Nevertheless, industry players and analysts have predicted that the competition will only increase.
“A certain automaker has taken the lead in launching significant price cuts and plenty of corporations have followed suit, triggering a brand new round of ‘price competition’ panic,” the China Association of Automobile Manufacturers said in a Chinese-language statement Saturday, translated by CNBC.
The federal government-linked body was taking shots at EV giant BYD, which sparked the most recent round of discounts on May 23, including a greater than 30% price cut on considered one of its automotive models.
“Disorderly ‘price wars’ intensify vicious competition,” the association said, warning of further pressure on profit margins and consumer safety risks. It called for corporations to abide by fair competition and never monopolize the market or “dump” goods at prices below the associated fee of production.
“‘Price wars’ don’t have any winners, much less a future,” People’s Day by day, the official newspaper of the ruling Chinese Communist Party, subsequently said in an article, citing the Ministry of Industry and Information Technology. That is in response to a CNBC translation of the Chinese.
The ministry will increase regulation of non-productive competition and cooperate with other departments to implement laws promoting fair competition, the report said.
The ministry didn’t immediately reply to a request for comment. BYD referred CNBC to its comment to China’s state media, during which the automaker said it firmly supports the manufacturing association’s calls for fair competition and making a healthy market.
Involution or evolution?
Analysts noted that BYD’s latest markdowns are literally formalizing discounts that buyers would have likely received previously under China’s trade-in subsidy program, which aimed to spice up consumption.
Despite nearly a 30% market share, BYD faces competitive pressure as well, Nomura analysts identified in a report Monday.
The automaker, which counted Warren Buffett as an early investor, reported 14% growth in sales last month, a slowdown from 19% year-on-year growth in April.
“Given the present oversupply situation within the China auto market, we consider probably the most intense competitive phase is yet to return, until if we will see a meaningful market consolidation in the longer term,” the Nomura analysts said.
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Despite the rhetoric, there is not much that might be done about market competition, Zhong Shi, an analyst with the China Automobile Dealers Association, said last week. He added that other countries are also watching the extraordinary competition in China’s automotive market and what it could mean for his or her local auto industries.
The common price of a automotive exported from China has fallen since 2023, reversing an upward trend previously, in response to figures published on social media by the China Passenger Automobile Association’s Secretary-General Cui Dongshu.
For China auto sales to Germany, the common export price per vehicle has fallen to $21,000 as of this 12 months, down from $30,000 in 2023, the information showed. In Mexico, the highest destination for Chinese automotive exports, was an exception, with the common price rising to $13,000, up from $12,000 two years ago.
In China, the common automotive retail price has fallen by around 19% over the past two years to around 165,000 yuan ($22,900), in response to Nomura, citing industry data from Autohome Research Institute.
There are other signals that the push into electric cars has created oversupply.
A “strange phenomenon” of secondhand cars being sold with zero mileage has emerged, Great Wall Motor Chairman Wei Jianjun said in a Sina Finance interview conducted in Mandarin on May 23. He added that around 3,000 to 4,000 vendors on Chinese used automotive platforms were selling such cars.
Vehicles were registered as sales or deliveries for automakers, only to be sold on the secondhand market almost immediately, which inflated sales volumes. But this created “an excessive amount of chaos”, prompting Wei to call for higher regulation throughout the industry.
Just an ‘appetizer’
China’s fast-growing market of battery-only and hybrid-powered cars has seen several price cuts during the last two years.
The price competition has yet to achieve its peak, and “competition will change into more intense in the subsequent five years,“ EV startup Xpeng’s CEO He Xiaopeng told Chinese media last week, which the corporate verified with CNBC.
“That is just an ‘appetizer’ of what’s to return,” he added. He said that slightly than competing on price, Xpeng would compete on technology and expand beyond China to the remainder of the world.
The startup has focused on making its driver-assist system a selling point and has delivered greater than 30,000 cars a month for the past seven months. Last week, Xpeng released the Max version of its Mona 03 at 129,800 ($18,020), nearly 17% cheaper than when the lower-priced model was initially revealed in August.
Like most electric automotive startups, Xpeng reported losses attributable to shareholders in the primary quarter of around $90 million. Nio, which has focused on more premium vehicles, on Tuesday reported a lack of $949.6 million in the primary quarter.
Nevertheless, Chinese smartphone company Xiaomi on Tuesday predicted its electric automotive business would turn a profit within the second half of the 12 months, an organization spokesperson confirmed to CNBC. The corporate entered the EV market last 12 months with its SU7 sedan priced cheaper than Tesla’s Model 3, and is predicted to tackle the Model Y with a YU7 SUV this summer.
