Chinese automakers have been caught in a spiral of internal competition leading to price wars and erupting public disputes. The issue of cutting corners under vicious competition has become a focus of public attention.
In what should have been a slow season for car sales in May, a wave of price reductions swept through the market. On May 20th, FAW Hongqi suddenly announced a price cut for its newly listed 2025 H9 by 94,000 yuan, reducing the starting price from 329,800 yuan to 235,800 yuan. On May 23rd, BYD announced price cuts of up to 34% for 22 models, signaling a new phase in the ongoing three-year electric vehicle price war. Following suit, brands like Changan, Zhejiang Zero Run, and Geely have also followed with price reductions. The entry of new players like Xiaomi and Huawei has further complicated the overall competitive landscape in the automotive industry.
On May 26th, Chery, a subsidiary of Chery, announced collective price reductions for its four major brands and 38 models, with the entry-level SUV, Ruihu 3x Excellence Edition, dropping from 57,900 yuan to 34,900 yuan, a staggering 40% decrease.
According to data from the China Passenger Car Association, in the first five months of 2024, price reductions in the Chinese auto market have exceeded 90% of the total for the entire year of 2023, with new energy vehicles widely operating in a state of loss. Furthermore, the China Automobile Dealers Association’s data shows that the industry’s profit margin fell by 7.3% year-on-year in 2024, with a profit margin of only 4.4%; in the first quarter of 2025, the average profit margin in the automotive industry was only 3.9%, hitting a ten-year low.
The internal competition in the automotive industry has also sparked heated disputes. Wei Jianjun, Chairman of Great Wall Motors, indirectly criticized BYD in a mainland media interview, stating that BYD’s actions pose a serious threat to the Chinese automotive industry and suggesting that a “Hengda” situation, referring to Evergrande Group’s collapse, is looming.
Recently, at the “2025 China Auto Chongqing Forum” held on June 6th to 7th, major automakers fiercely criticized the industry’s “internal competition” and especially targeted BYD in the public discourse. For instance, BYD’s General Manager, Li Yunfei, criticized some industry individuals as “bad and stupid,” while the deputy general manager of Geely, Yang Xueliang, who previously supported the “Hengda of the automotive industry” argument by Great Wall Motors’ CEO Wei Jianjun, counterattacked by calling it a case of “thieves accusing others of thievery.”
U.S. economist Davy J. Wong commented to Dajiyuan that Chinese automakers are currently stuck in a cycle of “self-destructive competition,” whose root cause is not just technical, market, or consumer choice issues, but rather a result of structural distortions across three levels:
1. Capital level: Over the past decade, the forced promotion of new energy vehicles in China through a mix of subsidies, local protection, low-interest loans, and policy biases has led to a massive influx of capital into automakers, resulting in excess capacity and imbalanced corporate structures.
2. Policy level: The official drive for excessive expansion of the entire industry has led to severe homogeneity and insufficient technological stratification.
3. Management level: Many companies internally continue to adhere to a “real estate mindset” or a “financial dream rate model” focusing on scale and capital value at the expense of neglecting product real value and brand building.
He believes that by pinpointing the industry’s “Hengda concern,” Wei Jianjun has actually identified the crux of the matter: similar to the real estate industry, the automotive industry is heading towards a cycle of “financing-expansion-internal competition-collapse” trap.
At the end of May, the China Association of Automobile Manufacturers issued a proposal on maintaining fair competition order through its official WeChat account, while the Chinese Ministry of Industry and Information Technology subsequently stated that it would increase efforts to rectify the “internal competition” in the auto industry. As early as a Politburo meeting on July 30th of last year, it had already raised the issue of preventing “internal competition” from turning malignant.
Wang Xiaowen, an assistant researcher at the Taiwan Institute of National Defense and Security Studies, told Dajiyuan that the official anti-internal competition stance in China is essentially a political attempt to manage the market, which may face difficulties. With China currently facing excess production capacity internally without being able to export significantly due to protectionist policies from various countries, the only available option seems to be inflating within. “The CCP probably cannot effectively manage this, they can only make verbal condemnations, otherwise, we wouldn’t have the Evergrande issue in the real estate sector.”
David further remarked that Chinese regulatory authorities may step in with “coordinated meetings” and “price guidance” for control, but the impact is limited due to three main reasons: China lacks a free market mechanism for bankruptcy and consolidation, local governments rely heavily on “car companies + land” as a major tax revenue and employment pillar, and consumer habits lean towards low-price “cost-effective” models, putting exiting companies at the risk of market share loss. As a result, the ultimate conclusion is likely to lead to a scenario where “officially condemned internal conflict leads to continued subversion behind the scenes within companies.”
David also pointed out that the predicament facing the Chinese auto industry today stems from policy exaggerations, capital speculations, aggressive exports, and internal disorder, leading to a “Great Chinese Auto Civil War” sparked by Wei Jianjun, ignited by Li Shufu, and retaliated by BYD, which is not just a public relations storm but a collective judgment on the entire industry’s system and direction. What appears to be a thriving industry with “hundreds of car models” may ultimately push Chinese automakers to the brink of a “real estate-style collapse.”
Li Shufu, Chairman of Geely Holding Group, stated during the recent “2025 China Auto Chongqing Forum” that various irregularities exist in China’s auto industry competition, with some companies resorting to “unspeakable” competitive means that severely disrupt market order and industry ecology. Unrestrained internal competition and aggressive price wars inevitably lead to issues like cutting corners and fraudulent practices, creating a situation of disorderly competition.
In fact, many car companies have long resorted to cutting corners to reduce costs, resulting in poor vehicle quality.
In January of this year, a video circulated online showed a white BYD Yuan Plus suddenly losing control in Heyuan, Guangdong Province, crashing into a large truck and instantly disintegrating into pieces, resembling shattered blocks, leading netizens to mock that these domestically produced electric vehicles are “made of plastic.”
Similar incidents also occurred with other brands. In early June, an Ora Catfish 001 vehicle in Shenzhen was involved in a traffic accident, with the car splitting in half from the middle, littering the ground with debris, even ejecting the battery pack. Fortunately, the driver remained unharmed, still seated in the driver’s seat.
Netizens revealed that the accident happened at a low speed, and the car split in half simply due to the slippery road surface. Comments ridiculed the quality of Chinese-made electric vehicles, questioning if the car bodies were made of glue.
On June 5th, a blogger criticized that electric vehicle manufacturers are cutting corners without limits to win price wars. “This is an electric car that cost over twenty thousand yuan. I won’t mention the brand name, as saying more might get me accused of blackening the name of Chinese new energy vehicles. I can only tell you, this is an electric car, and this brand has absolutely no bottom line. The rear crash beam is as thin as a soda can. Instead of storing an energy-absorbing box, they have punched holes in the so-called crash beam. I don’t understand what these holes are for. This crash beam is similar to a soda can, and it’s unclear what its purpose is.”
Another blogger in a video pointed out how some domestic cars cut corners to the extreme — the crash beams were so thin that they could cut hands, showcasing a notable difference in craftsmanship and materials compared to Japanese vehicles.
With the rapid expansion of the Chinese electric vehicle industry chain in recent years, various malicious incidents continue to surface, including spontaneous combustion, locked doors, and fatalities, along with increasing problems related to intelligent driving systems. However, negative news is often quickly censored online within China. Both the Chinese officialdom and automakers actively suppress domestic criticism, sometimes resorting to public security measures.
On June 6th, a video of a new energy vehicle spontaneously combusting inside a workshop circulated online. Many sharp-eyed netizens identified it as the BYD Tang D9 model. The video was quickly deleted.
An owner of a BYD Tang vehicle posted a video complaining that while driving home from Shanghai, with less than 500 meters away from home and 17% battery life remaining, the car completely malfunctioned, stranding him in place. Helplessly, he vented his frustration, labelling “a sin, this domestically produced car.” However, this video landed him in trouble, as he claimed he was detained by the public security for seven days due to the incident.
Huang Guocheng, a former design engineer for automotive structures in Guangxi, revealed in a recent interview with Dajiyuan that Chinese automakers have been focusing on eye-catching elements such as appearance, colors, and interior decorations rather than performance and safety. Rushed development processes and poor product stability stem from the desire to catch up with government subsidies and policy incentives.
Huang also exposed the severe corruption in China’s automotive industry, where many safety tests are influenced by government agencies. If automakers do not offer benefits, the testing process can become challenging for them. To pass inspections, many car companies tailor special samples for testing vehicles, using additional strengthening materials like thick steel plates, fireproof cotton, but when in actual production, they cut corners to save costs, resulting in serious safety hazards. Additionally, many purchasing managers at car companies are relatives of top management. With enough bribes, subpar suppliers can enter the supply chain, laying the groundwork for quality issues from the source.
In recent years, the Chinese government has heavily subsidized the development of domestic electric vehicles, causing oversupply and aggressive penetration of international markets, triggering anti-dumping sanctions from Europe, the US, and more countries. For example, the EU has initiated an anti-subsidy investigation targeting Chinese electric vehicle manufacturers like BYD, Geely, and SAIC; the US raised import tariffs on Chinese electric vehicles to 100% starting in 2024, explicitly opposing “non-market behavior”; Southeast Asia and India have also begun limiting imports from China, concerned about the “destructive competition” posed by its low prices.
David remarked that the issue of cutting corners within the industry not only poses a domestic quality crisis but also leads Chinese auto brands facing a triple dilemma overseas: a crisis of quality trust, reinforced policy barriers, and tarnished global image, being labeled once again as “Chinese manufacturing equals low-price and low-quality.” Therefore, internal competition not only destroys China’s automotive ecology but also undermines its “going global dream.”
Wang Xiaowen emphasized that the most crucial aspect of using cars is “safety.” If Chinese electric vehicles continue to experience fires, door malfunctions, and other accidents, affecting the international perception of Chinese electric vehicles, Western consumers might lose confidence in their quality, ultimately refusing to purchase them.
On June 1st, 2025, Malaysian media reported that a 33-year-old owner, Izzuan Hashim’s BYD Atto 3 electric crossover vehicle suddenly experienced a “driver’s seat door sensor malfunction,” almost causing an accident. Following this, he reached a repurchase agreement with BYD, although he still suffered some losses due to already paying monthly installments.
(Translation: English)