At a used car market in Beijing, salesman Ma Hui expressed concern that China’s electric vehicle (EV) industry is caught in a destructive race to the bottom.
He pointed out that EV manufacturers, led by BYD—the country’s market leader—have been locked in an intense price war that has not only squeezed the margins of automakers but also hurt sellers like himself.
“All of us were losing money last year,” Ma said about his fellow used car sellers in the market. “There are too many companies making too many new energy cars.”
Although China has often been accused by international trading partners of flooding the global market with cheap EVs, a similar narrative is now taking root within the country itself. The financial stress across the sector is drawing increasing attention and concern.
It warned, “Disorderly ‘price wars’ squeeze profits across the chain, impacting the entire ecosystem and risking income declines for workers. Long-term, this ‘race to the bottom’ competition is unsustainable.”
BYD has been at the center of the storm since announcing steep price cuts for many of its models in late May—some as high as 34%. Its cheapest model, the Seagull mini hatchback, has dropped from about $10,000 to just $7,700. This aggressive discounting has alarmed industry leaders.
Great Wall Motor Chairman Wei Jianjun, in an interview with Chinese outlet Sina Finance on May 23, likened the state of the EV sector to the collapse of China’s real estate giant Evergrande. “An ‘Evergrande-like’ crisis already exists in the automotive industry,” he said. “It just hasn’t erupted yet.”
The China Association of Automobile Manufacturers (CAAM), a government-backed industry group, also stepped in with a pointed statement urging companies to avoid “dumping” vehicles below production costs.
Without naming BYD directly, the association said, “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.” In response, BYD dismissed Wei’s comment as alarmist and reaffirmed its belief in fair competition.
Meanwhile, the pressure has reached the used car market, where sellers revealed a tactic known as “zero mileage used cars.” In this scheme, vehicles are registered, plated, and marked as sold even though they have never been driven—allowing automakers and dealers to artificially inflate sales numbers.
Ma, who is watching the industry closely, remains uneasy about the long-term consequences of this cutthroat competition. He noted that the price war is affecting already cautious consumers in a struggling economy. “With the price dropping like this, a lot of buyers might wait,” he said.