Authorities will focus on ensuring financial discipline across the supply chain.
China has pledged to strengthen oversight of its fast-growing new energy vehicle, or NEV, sector, vowing to step up cost investigations and price monitoring as part of efforts to rein in irrational competition and guide the industry toward sustainable growth.
At a State Council executive meeting chaired by Premier Li Qiang yesterday, the cabinet reviewed efforts to regulate market behavior in the NEV sector, among other agenda items.
The meeting directed regulators to swiftly identify pricing anomalies through targeted monitoring and increase oversight of vehicle quality, which may be at risk of being compromised amid increasing price pressure.
According to the China Association of Automobile Manufacturers, NEV sales reached 6.94 million units in the first half of 2025, a year-on-year increase of 40.3 percent. NEVs now account for more than 44 percent of total new car sales in the country.
Yet behind the surge in volume, automakers have offered steep discounts and deep subsidies to protect or grow their market share — tactics that have fueled sales but also strained upstream suppliers and downstream dealers.
Ensuring financial discipline across the supply chain has therefore emerged as a top priority for the government. At the meeting, top officials called for stepped-up efforts to ensure that major automakers fulfill their commitments to settle payments to suppliers within 60 days — a measure viewed as critical to maintaining liquidity for small- and mid-sized firms.
Days earlier, the Ministry of Industry and Information Technology launched an online platform for vendors to report overdue payments by large automakers.
These moves align with China’s broader campaign to curb “involution-style” competition — a term used to describe self-defeating market behavior driven by excessive competition and unsustainable pricing tactics.
Earlier this month, the State Administration for Market Regulation outlined seven types of misconduct fueling this pattern, including false advertising, defamation of rivals, unfair pricing, substandard quality, unreasonable platform rules, abuse of market dominance and improper government interference.
Specific concerns include unfair pricing practices such as below-cost dumping to crowd out competitors, as well as abuse of market dominance through purchasing at unfairly low prices or selling below cost without justifiable reason.
Source: MLex
