China’s cabinet plans to regulate ‘irrational’ competition in the EV industry.

Premier Li Qiang led a meeting to discuss stabilizing the sector amid an ongoing price war.

The government will step up cost investigations and price monitoring, with both short- and long-term measures, though details were not disclosed.

Automakers will be urged to honor supplier payment terms.

Authorities aim to strengthen the industry’s competitiveness through technological innovation and quality improvements.

Industry representatives have voiced concerns about how intense price competition affects the sector’s sustainability.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ China’s regulatory pivot reflects a planned transition from quantity to quality

China’s current intervention follows a deliberate policy pattern that began years ago, shifting from aggressive growth to sustainable development.

The government spent $4.5 billion on EV subsidies in 2015 but intentionally began phasing these out by 2020 to eliminate smaller, subsidy-dependent manufacturers 1.

This subsidy reduction was part of a calculated strategy to strengthen the industry, with central grants for passenger new energy vehicles deliberately cut by 20% to encourage consolidation 1.

The price war that has raged for two years is a direct consequence of this transition from subsidy-driven expansion to market-driven competition, creating the “irrational competition” now being addressed.

What we’re witnessing is the logical conclusion of China’s long-term plan to build a more sustainable EV sector dominated by technologically advanced companies rather than subsidy-hunters.

2️⃣ Excessive domestic competition threatens China’s global EV leadership

The scale of competition in China’s domestic market has reached unprecedented levels, with over 94 brands offering more than 300 EV models competing for market share 2.