BUSINESS

Beijing Warns Carmakers as Price War Escalates

Published: Jan. 16, 2026 2:03 a.m. GMT+8

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Prospective buyers look at cars at a new energy vehicle exhibition area inside a shopping mall in Shanghai. Photo: VCG

Chinese regulators summoned executives from major new-energy vehicle (NEV) makers this week, demanding an end to excessive competition just as a fresh round of price cuts was set to define the start of 2026.

The government’s move — an effort to curb so-called “involution,” a term in China for self-defeating internal competition — underscores Beijing’s challenge in promoting high-quality industrial growth as automakers struggle to stay afloat in a cooling market with dwindling subsidies.

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Explore the story in 30 seconds

Chinese regulators summoned NEV executives to address excessive competition and warned of strict price supervision and penalties.
The China Association of Automobile Manufacturers predicts 2026 auto sales will rise just 1% to 34.75 million units; NEV purchase tax break will be halved.
Despite regulatory warnings, automakers including BMW, BYD, and Tesla are intensifying price wars and promotions to defend market share.

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Who’s Who

BMW: BMW, a German automaker, is actively participating in the price war within China's new-energy vehicle market. In early January 2026, BMW significantly reduced prices across more than 30 of its models in China, contributing to the intense competition among car manufacturers.

SAIC Motor Corp. Ltd.: SAIC Motor Corp. Ltd. is one of the major Chinese automakers that has launched various incentives, such as subsidies and interest-free loans, in early 2026. This move is part of a renewed price war in China's new-energy vehicle (NEV) market, occurring despite regulatory warnings against excessive competition. SAIC Motor is looking to shore up market share amidst a cooling market and dwindling subsidies.

GAC Group: GAC Group is an automotive manufacturer based in China. Alongside other major Chinese automakers, it has initiated subsidies, interest-free loans, and other incentives, contributing to a new wave of price competition in the market despite regulatory warnings.

Chery Automobile Co. Ltd.: Chery Automobile Co. Ltd. (奇瑞汽车) is a major Chinese automaker. In early 2026, Chery, alongside other significant Chinese automakers like SAIC Motor Corp. Ltd. and GAC Group, joined a new wave of price wars in China's automotive market. They launched subsidies, interest-free loans, and various other incentives to attract buyers. This move comes despite regulatory warnings against aggressive competition in the industry.

Leapmotor Technology Co. Ltd.: Leapmotor Technology Co. Ltd. is a Chinese new-energy vehicle (NEV) maker. Amidst a renewed price war in early 2026, Leapmotor, along with other major Chinese automakers, launched subsidies, interest-free loans, and other incentives to attract consumers. This move came despite regulatory warnings against excessive competition.

Changan Automobile Co. Ltd.: Changan Automobile Co. Ltd. is a major Chinese automaker. Its Deepal brand recently joined other carmakers in launching promotions, indicating its participation in the ongoing price war within China's new-energy vehicle market. This reflects the intense competition among automakers in a cooling market with dwindling subsidies.

BYD Co. Ltd.: BYD Co. Ltd. is a major Chinese automaker that has avoided outright price cuts in the current NEV price war. Instead, it has opted to upgrade several plug-in hybrid models without increasing their sticker prices. This strategy effectively provides more value to consumers for the same cost, maintaining competitiveness without directly engaging in discounting.

Tesla Inc.: Tesla Inc. has extended its zero-interest financing plans in China to five years and introduced a seven-year low-interest option. This move is part of the ongoing price war among new-energy vehicle manufacturers in China, despite regulatory warnings against excessive competition. The company, like others, is intensifying discounts to maintain market share in a cooling market.

Geely Automobile Holdings Ltd.: Geely Automobile Holdings Ltd. is among the top 10 Chinese carmakers that have introduced early-year promotions and direct discounts. They are engaged in efforts to gain market share amidst a new price war in the Chinese new-energy vehicle market, despite regulatory warnings against excessive competition.

Dongfeng Motor Corp.: Dongfeng Motor Corp. is a Chinese automaker whose Venucia brand is participating in the ongoing price war among new-energy vehicle (NEV) makers in China. They have offered direct discounts and trade-in deals to attract customers. This comes amidst government efforts to curb excessive competition and promote high-quality industrial growth in the NEV market.

AI generated, for reference only

What Happened When

Early January 2026：: BMW slashed prices across more than 30 models in China.

January 2026：: Chinese regulators summoned executives from major NEV makers, demanding an end to excessive competition.

January 2026：: SAIC Motor, GAC Group, Chery Automobile, Leapmotor launched subsidies and other incentives.

January 2026：: Changan Automobile's Deepal brand joined in with its own promotions.

Wednesday, January 2026：: Ministry of Industry and Information Technology and other agencies held a closed-door meeting warning of severe penalties for violations regarding price competition.