China to halt price war in EV market

As early as June, the Chinese government intervened in a price war for electric vehicles sparked by BYD, summoning the CEOs of the country’s largest EV manufacturers to a meeting in Beijing. At the time, government representatives urged the CEOs to avoid offering unreasonable price cuts or selling vehicles below cost. Officials also criticised the practice of ‘zero-kilometre cars,’ where manufacturers sell excess new vehicles to financing companies or used car dealerships.

In response to these practices, which disproportionately disadvantage smaller manufacturers, the State Administration for Market Regulation (SAMR) has now published draft guidelines to ensure compliance with pricing regulations in the automotive industry. Affected companies may submit feedback on the draft until 22 December.

The guidelines aim to stabilise pricing in the Chinese automotive market, ensure fair competition, and protect both consumers and businesses. They address the pricing practices of suppliers, automotive manufacturers, and vehicle dealers in the production and sale of new cars in China, and are based on existing Chinese regulations on pricing, competition, and anti-dumping.

Specifically, the draft states that prices must be set based on costs and market conditions, while manufacturers must respect the pricing autonomy of dealers. Bonus and rebate systems must be clear, transparent, and governed by contracts.

Rules against market exclusion and monopolisation

The draft proposes banning practices such as price-fixing agreements between car manufacturers or suppliers, including fixed prices or uniform pricing formulas. Additionally, selling below production costs to eliminate competitors or achieve monopolisation—including covert methods like discounts, over-deliveries, or invoice circumvention—will be prohibited. Price discrimination against dealers under identical business conditions will also be deemed illegal. Furthermore, manufacturers must communicate paid digital features more clearly, for example, by specifying the duration of free trial periods. Paid features may only be charged to customers if they have been explicitly disclosed in advance.

The draft guidelines also set clear requirements for dealers and distribution. Prices must be displayed clearly and in full, including equipment, options, and delivery times. Dealers may not cite false reference prices, such as an alleged “market price,” nor offer fake bargains or bait-and-switch deals without availability. Selling below cost price is also prohibited. Online sales will likewise be subject to comprehensive regulations.

According to news agency Bloomberg, major EV manufacturers such as BYD and Xpeng have already expressed support for the regulatory authority’s draft and pledged to strengthen compliance with the regulations while strictly avoiding price fraud or unfair competition.

automobilwoche.de (German), bloomberg.com, samr.gov.cn (Chinese)

This article was originally published by Florian Treiss for electrive’s German edition