China Urges EV Makers to Prioritise Innovation Over Price War
Chinese authorities are pushing for stricter oversight of the electric vehicle market, urging carmakers to prioritise technological innovation. This directive comes as manufacturers face cooling demand and the end of government subsidies.
Government bodies, including the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the State Administration for Market Regulation, convened 17 major carmakers. The meeting aimed to regulate competition and stabilise a sector marked by an ongoing price war.
Officials pledged to strengthen price monitoring and cost investigations. Companies were also urged to honour their 60-day payment cycle commitment to suppliers.
A progress report from the China Association of Automobile Manufacturers, a government-backed industry consortium, indicated that the 17 carmakers reduced average payment cycles to 54 days. Four of these carmakers settled payments in under 50 days.
Extended payment cycles have been a cost-cutting measure in China’s automobile market, but they have reduced supply-chain profitability. This occurs even as Beijing works to counter deflationary pressures.
The government encouraged companies to shift from price-based competition to innovation-led growth. This involves accelerating the development of domestic automotive chips, foundational software, and self-driving systems to lessen reliance on foreign technology.
With direct subsidies now phased out, Beijing has focused on fostering organic demand and global expansion. This includes promoting vehicle trade-in programmes and the broader use of new-energy heavy trucks.
The vehicle trade-in subsidy scheme, renewed at the end of 2025, provides cash incentives for buyers replacing older vehicles. New-energy models receive higher subsidies.
Authorities plan policy documents to foster a healthy car modification market, aiming to unlock consumer potential. The government also seeks to enhance financial credit services and international logistics to support Chinese EV exports and overseas operations.
In the first two months of the year, China sold more than 1.7 million new-energy vehicles, a 7% decrease from the previous year. This decline occurred as consumers became more budget-conscious following the phasing out of a 10% sales tax exemption.
Electric vehicle makers, including BYD, have shifted their focus in recent launches to supercharging technology and updated intelligent driving systems. They are also accelerating overseas sales efforts.
Sales of electric vehicles in Europe increased by 33% year on year to 4.3 million units in 2025. This data comes from Benchmark Mineral Intelligence, a London-based minerals research and pricing firm.
Chinese authorities are urging electric vehicle makers to focus on innovation over aggressive discounting.
Government bodies met with 17 major carmakers to regulate competition and stabilise the market.
Officials pledged to strengthen price monitoring and called for companies to honour supplier payment cycles.
Source: SCMP
