There is news from China again! $TSLA (+5,65 %) and 15 other electric car manufacturers like $9866 (+0,05 %) and$1211 (-0,51 %) have launched a major initiative to end price wars in the industry. At the China Auto Forum 2023 in Shanghai, they pledged to adhere to fair competition practices. The aim of the agreement is to curb the intense price war and establish a stable market order. However, the agreement is based on self-regulation, meaning it is not officially enforceable. At first, the China Association of Automobile Manufacturers (CAAM) had supported the initiative, but in the meantime its support has been withdrawn because the agreement may violate antitrust law.
As you have surely noticed, the Chinese automotive market is the largest in the world. Intense competition had led to sharp price cuts. While this has boosted sales of electric vehicles, it has also threatened the profitability of the industry.
In any case, it remains exciting to see how the situation will evolve and whether alternative regulatory approaches will be considered to ensure a stable and fair market environment for the Chinese electric car industry. In my opinion, the efforts to end the price war are an important step in driving the sustainable development of the electric vehicle industry in China. How do you guys see it? Do you think the manufacturers will comply with the regulations?
