The China Association of Automobile Manufacturers (CAAM) has called on automakers to stop disorderly competition in the fast-growing new energy vehicle (NEV) market. The association warns that such behavior risks hurting the entire industry’s health and future.
China’s NEV sector has grown quickly in recent years. New energy vehicles now make up more than 40 percent of all new car sales in the country. Despite this success, profitability in the sector has been dropping. The CAAM links this decline to a trend called “involution-style” competition, where companies engage in harmful price wars rather than healthy market rivalry.
The CAAM statement highlights that continuous investment in innovation and product support is vital for the industry’s growth. However, aggressive price cuts have disrupted business operations. The association points to a major carmaker’s sharp price reductions on May 23, which were quickly matched by other companies. This triggered panic in the market and a damaging cycle of price slashing.
These price wars squeeze profit margins and reduce the quality of services. They also threaten the stability of supply chains and risk pushing the entire sector into a negative spiral. The CAAM warns that such disorderly competition can harm consumer rights and lead to safety problems.
CAAM urges all automakers to follow fair competition rules. Leading companies should avoid monopolistic practices that limit other players’ market space. The association emphasizes that lawful price changes are acceptable, but firms must not sell products below cost or use deceptive marketing tactics.
To protect the industry and consumers, companies are encouraged to conduct self-inspections and comply with relevant national laws and regulations. This approach aims to ensure a healthy, sustainable NEV market.
China’s NEV industry is at a critical point. Maintaining fair competition and avoiding destructive price wars will help secure the sector’s growth and consumer trust. The CAAM’s warnings underline the need for cooperation among automakers to foster innovation and stable development.
