Beijing — As China’s electric vehicle price war gets more intense, its senior officials have sounded the alert with well-publicized demands to stop too fierce competition, also referred to as “neijuan” or involution.
Although the keyword has several connotations in China to suggest a race to the bottom, Chinese Premier Li Qiang used it in his annual work report in March. Last month’s meeting of the market regulator also mandated “comprehensively rectifying ‘involutionary’ competition.”
Analysts and business players, however, have forecast that the rivalry will just get more intense.
The China Association of Automobile Manufacturers said in a Chinese-language statement Saturday, “A certain automaker has taken the lead in launching significant price cuts and many companies have followed suit, triggering a new round of ‘price war’ panic.”
The government-linked company was aiming shots at EV behemoth BYD, which set off the most recent round of discounts on May 23 included a more than 30% price reduction on one of its models.
“Disorderly ‘price wars’ intensify vicious competition,” the group stated, warning of more strain on profit margins and consumer safety hazards. It urged businesses to follow fair competition instead of monopolizing the market or “dump” products at prices less than manufacturing cost.
According to the study, the ministry will boost control of non-productive rivalry and work with other agencies to implement laws favoring fair competition.
The government took no quick reply to a request for comments. its remark to China’s state media, in which the manufacturer declared it unequivocally supports the recommendations for fair competition and building a healthy market made by the manufacturing association.
