context: Since late 2025, the PRC’s push against 'involution-style' competition has moved decisively from guidance to enforcement, with the EV and broader auto sector at the centre. The 2025 Central Economic Work Conference elevated anti-involution to a macro-policy priority, calling for curbing destructive price competition through unified market rules and signalling its incorporation into the 15th 5-year plan. This was followed by the release of draft automotive price-behaviour regulations, which for the first time explicitly targeted sales below cost and disguised discounting, marking a shift towards hard constraints on price wars. In 2026, regulators are further reinforcing this direction through joint actions by industrial, planning and market authorities, framing the EV price war not as a cyclical market issue but as a structural problem to be addressed through sustained supervision, cost discipline and a reorientation of competition towards technology, efficiency and long-term value rather than price alone.
The Ministry of Industry and Information Technology, National Development and Reform Commission and the State Administration for Market Regulation held a joint meeting on 14 January 2026, with NEV (new energy vehicle) manufacturers, pledging tighter cost investigations, price monitoring, enforcement actions and production-consistency checks to rein in disorderly competition.
Despite policy momentum building in mid-2025, price competition has not disappeared. As persistent price cuts conflict with regulatory guidance, automakers have shifted toward aggressive upfront pricing, launching new models at lower initial prices rather than cutting prices post-launch.
CAAM (China Association of Automobile Manufacturers) cites
- soft domestic demand, fading policy stimulus effects
- a halving of NEV purchase tax incentives as key headwinds
CAAM expects total vehicle sales to rise just 1 percent y-o-y to 34.75 million units, with passenger vehicle growth limited to 0.5 percent.
Ying Chongxi 应重熙 Nomura China autos and technology analyst expects
- automakers to continue prioritizing market share in 2026
- competition must shift from price wars toward product and technology upgrades, raising costs and intensifying pressure on margins and operations
Other analysts note entrenched price dependence among both manufacturers and consumers after years of cutthroat competition. End-2025 tax subsidies effectively functioned as disguised price cuts and pricing pressure is expected to persist into 2026.
Early 2026 has already seen renewed competitive actions. BMW cut list prices on over 30 models, while major automakers rolled out promotions mainly via:
- tax and trade-in subsidies
- low- or zero-interest financing
- added ownership benefits
BYD pursued a 'more for the same price' strategy through specification upgrades, while Tesla expanded long-term low-interest financing. Nearly all leading automakers are now participating, indicating that price competition—though increasingly indirect—remains difficult to contain.