^{A worker checks a finished vehicle on the production line for electric vehicle maker Zeekr at its factory on May 29, 2025 in Ningbo, China. Kevin Frayer | Getty Images News | Getty Images}

China’s booming electric vehicle (EV) market is showing signs of strain as automakers engage in aggressive price slashing, triggering alarm bells from regulators and leading economists. While Beijing is urging automakers to curb what it calls “disorderly competition,” experts warn that this price war is far from over. With vehicle exports, domestic prices, and secondhand listings all flashing warning signs, China’s EV market may be heading toward a breaking point.

BYD Sparks New Wave of Price Cuts

On May 23, EV giant BYD (Build Your Dreams) announced dramatic price reductions—more than 30% on select models, notably on the Qin Plus DM-i sedan. This move was meant to boost consumer demand but quickly led to a chain reaction across the industry, with other automakers following suit.

The China Association of Automobile Manufacturers (CAAM), a government-linked body, criticized BYD’s actions in a rare public statement, warning that such pricing strategies could “intensify vicious competition”, reduce profit margins, and even compromise consumer safety.

Government Intervenes: Calls for "Self-Regulation"

In response, the Chinese Ministry of Industry and Information Technology (MIIT) stepped in, convening executives from several EV manufacturers in Beijing and demanding industry-wide “self-regulation.” The call to action follows a key reference in Premier Li Qiang’s March 2025 Work Report, which condemned “involutionary” market behavior—a term used in China to describe zero-sum competition that leads to inefficiency and loss.

Official state media outlet People’s Daily echoed the sentiment, saying, “Price wars have no winners, much less a future.”

However, industry experts remain skeptical. According to Zhong Shi of the China Automobile Dealers Association, "Government rhetoric may be strong, but actual regulatory enforcement in a market this competitive is unlikely to have meaningful short-term effects."

The Market Reality: Oversupply and Shrinking Prices

Several indicators point toward oversupply:

• Export Price Drop: According to Cui Dongshu, Secretary-General of the China Passenger Car Association, the average price of exported vehicles to Germany dropped from $30,000 in 2023 to $21,000 in 2025.
• Mexico, the top importer of Chinese EVs, saw a slight increase in average export price to $13,000, up from $12,000 in 2023.
• Domestic Price Dip: The average retail price of a car in China has plummeted by 19% over two years, now at around 165,000 yuan ($22,900), per Autohome Research Institute, cited by Nomura.

Perhaps most revealing is the emergence of zero-mileage “used” cars—vehicles registered as sold but resold almost immediately on used-car platforms. Great Wall Motors Chairman Wei Jianjun claims 3,000 to 4,000 vendors are engaged in this practice, inflating delivery numbers and distorting true demand. He labeled it “chaotic” and urged regulators to intervene.

Analysts: The Real Battle Is Yet to Begin

Despite commanding nearly 30% of China’s EV market, BYD faces immense pressure. Nomura analysts observed that the automaker’s sales growth slowed to 14% in May, down from 19% in April, despite the aggressive pricing. The analysts believe China is only in the early stages of what will be a prolonged and fierce market shakeout.

“There’s significant overcapacity,” their report stated, “and we expect consolidation to occur only after this intense phase of competition reaches a peak.”

Automakers Are Looking Abroad—and to Technology

Chinese EV manufacturers aren’t putting all their eggs in the price basket. Xpeng’s CEO He Xiaopeng said in a recent media interview, “This is just the appetizer. The next five years will see even more intense competition.” Instead of relying solely on pricing tactics, Xpeng is doubling down on autonomous driving tech and international expansion.

• The company’s Mona 03 Max, launched last week, is priced at 129,800 yuan ($18,020)—17% cheaper than a previously announced version.
• Xpeng has been delivering over 30,000 vehicles monthly for the past seven months.

However, like many Chinese EV startups, Xpeng posted a Q1 loss of $90 million. Meanwhile, Nio, which targets the premium segment, reported a Q1 loss of $949.6 million, showing how profitability remains elusive even for established players.

Xiaomi Bets on Profitability

In contrast, consumer electronics giant Xiaomi, a newcomer to the EV market, is more optimistic. Its SU7 sedan, priced below Tesla’s Model 3, has been well received. A Xiaomi spokesperson told CNBC that the company expects its EV division to turn a profit in the second half of 2025.

Looking ahead, Xiaomi is set to launch the YU7 SUV this summer to compete directly with Tesla’s Model Y—marking a major escalation in the global EV battlefield.

A Market at Crossroads

While Beijing’s regulatory push shows intent, the reality is that market forces are outpacing policy responses. The EV boom, once seen as China’s crown jewel for global innovation, is now facing the harsh truth of overcapacity, thinning margins, and global scrutiny.

The price war is no longer just a domestic issue—it is becoming a global story, influencing auto sectors in Germany, Mexico, Southeast Asia, and beyond. With major automakers betting on either tech differentiation or foreign markets, the next chapter in China’s EV saga will be about who can survive, scale, and profit in one of the most competitive environments the auto world has ever seen.