Volkswacht Bodensee - China moves to tame 'irrational competition' as EV price war persists

Beijing has poured vast state funds into the EV sector, supporting the development and production of less polluting battery-powered vehicles.

But a price war has left many startups bust as firms flood the domestic market with low-cost cars and trade-in schemes, offering huge discounts to customers to give up their old auto for a new one.

Domestic criticism has mounted in recent months against intra-industry "involution" -- a popular tag used to describe the race to outcompete that ends up nowhere.

A meeting of top officials in Beijing -- chaired by Premier Li Qiang -- called Wednesday for tighter price monitoring and improving long-term regulation of competition in the sector, state news agency Xinhua said.

Officials called for stronger order in the new energy vehicle market to "curb irrational competition" and spur more healthy development, Xinhua said.

"It is necessary to... strengthen industry self-discipline" and help companies enhance their competitiveness through technological innovation, the agency quoted officials as saying.

The China Association of Automobile Manufacturers, a top industry group, warned in May that "disorderly" competition would exacerbate harmful rivalry and hurt growth.

Analyst Bill Bishop wrote in his Sinocism newsletter that the wording of Wednesday's readout could suggest Beijing will place "price controls" on electric vehicles.

"The language on the new energy vehicle (NEV) industry was tough, in another sign that the government is going to intervene to rectify the 'irrational competition' in the industry," he wrote.

M.Schneider--VB