“Irrational competition” of electric cars: even China says stop

It has been two years since Chinese manufacturers wage a merciless battle with discount blows. For example, flash offers and cars sold sometimes under their cost price. However, All blows were allowed to conquer the local market. Furthermore, The Chinese government, which has long turned its eyes, seems to have decided to put order.

At a meeting of the Council of State Affairs chaired by Prime Minister Li Qiang on July 16. However, the authorities announced that he wanted ” regulate irrational competition In the electric cars sector, as Reuters reports. Consequently, A polished way of saying that the price war, tolerated so far, could “irrational competition” electric cars: even well become a practice under close surveillance.

Manufacturers summoned to calm down – "irrational competition" electric cars: even

The signal is clear: the end of the recess is whistled. In addition, According to CCTV state television. Similarly, the authorities will now closely monitor pricing practices, launch targeted surveys and encourage manufacturers to “innovate” and “improve quality” rather than breaking prices. Clearly: sell better, no cheaper. A message that we know only too well in Europe. but a practice that tends to quickly show its limits to keep a dynamic automotive market.

In recent months. the Ministry of Industry has already brought together the main players in the sector in Beijing, including Byd, to pass them a clear message: self-regulation or regulation imposed. Manufacturers had been asked to avoid selling as far as loss. using tactical registrations, a practice that has become frequent to keep face on the most disputed segments. The vice-president of BYD recently declared that the situation was no longer “tenable”. but the group has revived an offensive on prices shortly after, a necessary evil, because byd has an overcapacity of production and the stock to be sold. This new reminder to order should stop this escalation.

Finally. the biggest groups, like Byd or Geely, were “irrational competition” electric cars: even also pushed to engage in best practices vis-à-vis their suppliers, with a promise: pay within 60 days. An attempt to end the chronic payment delays which serve as a lever for occult funding in the sector.

A leading market … but under tension

Behind this speech, it is all the industrial credibility of China that is at stake. Admittedly, Byd exceeded Tesla in Europe on sales of 100 % electric cars “irrational competition” electric cars: even in April. Nevertheless. this success is based on an increasingly fragile economic model: forced march production, margins sacrificed in the price war, and an industrial ecosystem under infusion. A colossus with clay feet, in a way.

China knows that leaving this price war has become too risky. especially since its manufacturers count on export to balance their accounts. However. the United States and Europe with its protectionist measures are a new grain of sand for the Chinese automotive industry. The balance is therefore threatened.

The question is now whether manufacturers will play the game. and how it could affect the largest market for the electric car.

All tech news in the blink of an eye

Add Numerama “irrational competition” electric cars: even to your home screen. stay connected to the future!

Installer Numerama