China wants to stop the price confrontation of electric vehicle manufacturers

The Chinese authorities have prepared a draft of new rules aimed at ending the price war in the electric vehicle and hybrid market.

What is known

The State Administration for Market Regulation has published a draft of rules prohibiting automakers from selling cars below cost price to push out competitors. Violators were threatened with "serious legal consequences".

The document covers price discipline compliance at all stages - from car and spare parts production to pricing policies and sales practices. It separately notes the possibilities of fake discounts, price collusion, and "irrational competition" damaging the market and consumers.

The regulator links the campaign to excess production capacity and weak consumer demand: the number of electric vehicle and plug-in hybrid brands in China has decreased from about 500 to 129. According to the consulting company AlixPartners, only about a dozen of them will remain financially viable by the end of the decade. Excess supply and falling prices have led to a phenomenon that Chinese officials call hypercompetition with diminishing returns.

This phenomenon has intensified trade tensions, as Chinese manufacturers strive to export more and more cheap products. Various foreign markets have responded by imposing duties of up to 100% on Chinese-made cars, the most recent example being Mexico - in early December, the country imposed a 50% duty.

Major Chinese manufacturers Xpeng and BYD have already publicly supported the initiative, stating their intention to enhance internal control and avoid price fraud and unfair competition. Formally, the discussion of the draft document will continue until December 22.

Source: Automotiveworld