China’s Ministry of Industry and Information Technology (MIIT) has pledged to crack down on unfair competition in the country’s electric vehicle (EV) market, warning manufacturers to halt excessive discounting practices that are fuelling a deepening price war.
The government held a meeting earlier this week with executives from more than a dozen automakers, including Geely and Xiaomi, urging them to avoid irrational price cuts and below-cost sales, according to people familiar with the matter. Officials from MIIT, the country’s top economic planning body, and the market regulator reportedly participated in the talks.
In a statement published Tuesday, MIIT said it would “carry out anti-unfair competition law enforcement, and take necessary regulatory measures,” adding that the move was aimed at preserving a “fair and orderly market environment” and ensuring “high-quality development” of the automotive sector.
The ministry’s intervention comes amid growing concerns from industry leaders and analysts over the aggressive price cuts initiated by leading Chinese automaker BYD. The company’s recent campaign includes discounts of up to 21% on models such as the Seagull small EV and the Qin Plus DM-i plug-in hybrid, prompting rivals including Leapmotor, SAIC’s IM Motors and Geely to follow suit.
Deutsche Bank analysts attributed BYD’s move to a build-up in dealer inventories, which have reportedly surpassed 150,000 units. The Chinese Association of Automobile Manufacturers criticized the campaign without naming the company, warning that it had triggered a “vicious cycle” and undermined supply chain stability.
Industry figures also expressed concern about “zero mileage” practices, where new vehicles are sold through secondary channels at steep discounts. “There are about 3,000 to 4,000 vendors selling unused vehicles on used car platforms,” said Great Wall Motor Chairman Wei Jianjun, according to a May 23 interview with Sina Finance.
Zhang Jinhua, president of the Chinese Society of Automotive Engineering, said the industry must move beyond destructive competition and focus on long-term sustainability. “To break the ‘involutional’ competition, it is necessary to strengthen the synergy between industry enterprises’ self-discipline, social supervision and government regulation,” Zhang said, according to MIIT.
Echoing the sentiment, Chery Chairman Yin Tongyue urged manufacturers to emphasize “technological innovation, brand upward mobility and synergy among all parties,” as cited on the ministry’s official website.
The price war is also having international ramifications. The average export price of Chinese vehicles to Germany fell to $21,000 in 2025, down from $30,000 in 2023, CNBC reported, citing industry data.
MIIT said it would work with relevant departments to strengthen product inspections and industrial restructuring, encouraging multi-brand strategies and greater market segmentation. “Brands should move forward through technological empowerment, quality enhancement, and by improving product value and profitability,” the ministry said.