China is cracking down on price wars in the EV sector – but do consumers want that? Elaine Yu looks at the buyers' side of the story.

Shanghai

China's electric vehicle (EV) sector is undergoing a fierce price war, resulting in lower prices for consumers but also squeezing automakers' profits and raising concerns about quality and innovation. While some buyers welcome the discounts, others worry that aggressive competition could lead to manufacturers cutting corners, potentially impacting safety and long-term value.

State media and government officials have criticized the ongoing price battles for their potential to stifle innovation, reduce wages, and undermine investment confidence. Automakers are responding by offering new features and focusing on brand loyalty, while international markets are also feeling the effects as Chinese EVs challenge established brands. Despite the appeal of falling prices, the long-term consequences for both buyers and sellers remain uncertain.

China's EV price war: How buyers & sellers feel about lower prices

Another sector that's been at the center of Beijing's anti-involution campaign is electric vehicles. Elaine Yu has been taking a closer look at the impact of the price war in that space and joins us now. Elaine. Yeah, we've been talking a lot about the price wars across sectors, right, and how they're squeezing profit margins and shaking investor confidence, but what do consumers actually think? So consumers seem like the obvious winner here when prices keep falling, but how are they really impacted? And in a deflationary environment, and of course China has been in a deflationary streak for the longest period in decades, and so when prices keep falling that could create a cycle where revenues are hurt, leading to more price cuts to boost sales, and that could lead to wage reductions and eventually layoffs. So we looked at the EV sector closely from a consumer's perspective to understand the ripple effects, and let's take a look. From cars to food delivery to solar panels, China's fierce price wars have become so intense they've prompted even President Xi Jinping to speak up. Calling the trend disorderly, he wants tighter regulation. In the booming EV market, price cuts are rampant, eating into automakers' profits. But what does all this mean for consumers? Li Qun, a shopper in Beijing, says he was immediately hooked when an Xpeng salesperson called him about new discounts. The harder the manufacturers compete, the better it is for the buyers. Compete however you want. But cutthroat competition comes with hidden costs, with some buyer concerns that quality and safety can suffer when manufacturers cut corners to stay cheap. Timing a purchase could be another gamble, says Yu Peng, a customer in Beijing. We say buy early, enjoy early. After you buy, the price might fluctuate. As a consumer, there's not much you can do except quietly accept it. State media has been critical of these price wars, saying they hold back innovation while hurting wages and investment confidence. Recent commentary also slammed some local governments for what they call unfair incentives. Subsidies might be propping up the market, but companies are going all in to cultivate the brand loyalty key to keeping their customers. Chinese-Swedish carmaker Lincoln Co. is adding eye-catching features to stand out. Sales manager Jim Ma says the company's focus isn't on short-term profits, but winning trust over time. Our pricing policy is meant to make customers like and choose our brand. In the long run, when they need after-sales services or decide to replace or buy a new car, we hope they'll still choose us. The ripple effects of China's pricing battles are being felt abroad, in varied ways. Some consumers outside China welcome the shake-up that forces automakers globally to offer better products. Advocacy group Transport and Environment says Chinese EVs helped fill the gap left by slow-moving European brands. And while consumers in Europe generally care more about quality than a carmaker's origin, they also worry about broader economic impacts. They just want to make sure that this does not result in, for example, their neighbor or someone in a nearby village losing their job. The bottom line is, if the price war undercuts quality and innovation, consumers may end up paying a different kind of price. So it's not hard to see the appeal of falling prices, especially for consumers. But in the long term, the trade-offs are more complicated. And in the end, there might be no winners, Emily.

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