In a recent resurgence of price wars in the Chinese automobile market, new energy vehicle models in October saw an average price drop of 18,000 yuan, a decrease of 11.1%. Several car manufacturers participated in this price reduction, indicating that the efforts by the Chinese authorities to curb the price wars and counter the trend of hyper-competition since July 2025 have once again failed.
The Secretary General of the Passenger Car Market Information Joint Committee of China Automobile Dealers Association (referred to as the Joint Committee) Cui Dongshu recently stated that “In October 2025, the average price reduction for new energy vehicles reached 18,000 yuan, with a reduction rate of 11.1%.”
According to Cui Dongshu’s statistics, from January to October this year, the average price reduction for new energy vehicle models reached 21,000 yuan, with a reduction rate of 10.8%.
The average price reduction rate refers to the sum of the price reduction percentages (expressed in percentages or amounts) of multiple commodities divided by the number of commodities to obtain the average value.
Analysis by a reporter from the First Financial suggests that in a year-on-year comparison, the price reduction intensity for the first 10 months is second only to 2022 (13.2%). Looking at the situation this year, the price reduction intensity in October exceeded that of September (9.8%).
Both pure electric and plug-in hybrid vehicles from state-owned enterprises have seen larger price reductions.
In terms of pure electric vehicles, the largest price reduction was for the FAW Hongqi EQM pure electric vehicle model, with a starting price in October of 89,800 yuan, compared to the lowest price in the past two years of 121,800 yuan, resulting in a price reduction of 36%. The price reductions for the Dongfeng Yipai Namo 01 and Haopai GT pure electric vehicles were 10% and 13% respectively.
For plug-in hybrid vehicles, the average price after the price reduction in October was 218,000 yuan, with a price reduction of 42,000 yuan and a price reduction intensity of 19%. This was mainly driven by the reductions in the prices of the GAC Trumpchi M8 and Great Wall High Mountain plug-in hybrids by 60,000 yuan and 64,000 yuan, with price reductions of 22% for both models.
Apart from the aforementioned models, several other models joined the price reduction trend in October.
On October 28th, Tengshi Auto released the new model Tengshi N8L, with a price nearly 100,000 yuan lower than the Tengshi N9. On the same day, FAW Toyota launched the new Corolla Sharp with a price range of 126,800 to 159,800 yuan, with a special launch price reduction of 30,000 yuan, lowering the price range to 96,800 to 129,800 yuan.
Moreover, the price reduction by the car manufacturers is expected to lead to a decline in profits. Among the car manufacturers that have already released their third-quarter reports, many have reported profit declines, and some even incurred losses. Great Wall Motors saw a profit decline of over 30%; Changan Automobile’s net profit attributable to the parent company decreased by 14.66% year-on-year; although Dongfeng Group reported positive net profit in the third quarter, it still incurred a non-recurring loss of 115 million yuan; GAC Group reported the highest quarterly loss since going public, with a net loss of 1.774 billion yuan, an increase of 27.02% in losses compared to the previous year.
Furthermore, in the third quarter, Beiqi Yinxiang incurred losses of 1.118 billion yuan, while Zotye Auto reported a loss of 74.76 million yuan. The losses at vehicle design service provider Alt reached 110 million yuan in the first three quarters, a sharp drop of 12,246.62% year-on-year.
The resurgence of the price war in October indicates that the measures taken by the Chinese government since July of last year to combat the “inner spiral” trend have once again failed.
On May 23, BYD reduced prices of 22 models under its brand King Dynasty and Ocean, with price reductions ranging from 12,000 to 53,000 yuan, and the price reduction activities were planned to continue until the end of June. This price reduction was the most significant one launched by BYD since the end of March. Subsequently, many other car manufacturers, including Geely and Chery, followed suit with price reductions.
The actions taken by various levels of Chinese authorities in response to these price reductions have been publicly criticized, with calls to halt price wars and the “inner spiral” phenomenon.
The China Association of Automobile Manufacturers issued a “Proposal on Maintaining a Fair Competition Order and Promoting the Healthy Development of the Industry,” calling on enterprises not to dump products at prices below cost, not to disrupt market order, and not to harm the fundamental interests of the industry and consumers.
Officials from the Ministry of Industry and Information Technology later remarked that unregulated price wars between companies are typical manifestations of internal competition.
During the sixth meeting of the Central Committee for Financial and Economic Affairs on July 1, Chinese President Xi Jinping urged for the regulation of low-priced unregulated competition among enterprises, guiding them to enhance product quality and facilitate orderly elimination of outdated production capacities.
At the State Council’s executive meeting held during the week of July 20, enhanced cost investigations and price monitoring were called for, along with strengthened supervision to ensure consistent product quality, and urging key car enterprises to fulfill payment promises in a timely manner.
On July 24, the National Development and Reform Commission and the State Administration for Market Regulation jointly formulated a draft amendment to the Price Law (draft for soliciting opinions), further standardizing government-guided prices and government pricing regulations. For serious violations of transparent pricing, a maximum fine of 50,000 yuan can be imposed.
In fact, the Chinese government’s efforts to combat the “inner spiral” phenomenon began as early as July 2024. During a meeting of the Politburo on July 30, it was emphasized to strengthen industry self-discipline and prevent “inner spiral” malignant competition. During the Central Economic Work Conference held on December 11, measures were outlined to comprehensively address the “inner spiral” malignant competition. During the annual “Two Sessions” in early March this year, Premier Li Keqiang also stressed the need to “comprehensively address the ‘inner spiral’ competition.”
Professor Sun Guoxiang from the Department of International Affairs and Business at Nanhua University in Taiwan has previously suggested that there is a clear problem of “dual signals” in the Chinese economy: local governments continue to push for industrial expansion in pursuit of GDP and employment targets, while the central government uses administrative means to combat the “inner spiral,” creating a policy contradiction of “promoting expansion with one hand and suppressing the ‘inner spiral’ with the other.”
Experts generally believe that while the remedial actions may seem grand, if they do not address core structural issues such as financial dependency, government-enterprise relations, and market mechanisms, it may ultimately amount to just a superficial “policy show.” Given the current situation where local governments still prioritize output value and tax revenue as key performance indicators, the root causes of industrial “inner spiral” are difficult to eradicate.