How cheap can Chinese cars get? Chinese government considers regulating entire car industry as JAC and GAC start to buckle under price pressure from aggressive BYD: report

The Chinese government is about to step-in on the electric car price war, according to reports.

China’s state broadcaster CCTV said the Chinese government’s cabinet has pledged to regulate a “phenomenon of irrational competition” in the country’s auto sector. Exactly what regulation will look like at this stage is unknown, but the news comes as state-owned automakers are beginning to buckle under price pressure, particularly from BYD.

The so-called ‘price-war’ amongst Chinese automakers has been raging for two years and has seen thousands slashed from the price of popular models in a race to the bottom to capture as much market share as possible.

GAC Group and JAC have both warned investors to expect larger-than-ever losses in their second-quarter financial results, with GAC warning it could lose as much as 2.6 billion RMB (roughly A$556 million) in the first half of 2025.

GAC is also sharing in the losses of its joint-venture partners, Toyota and Honda, which are also struggling to compete with aggressive non-state owned players like BYD, Geely and GWM.

GWM’s outspoken Chairman Wei Jianjun has warned of potential industry collapse stating: “If it continues like this, the safety of China’s auto industry will be seriously threatened.:

He pointed the finger at some, unnamed manufacturers, he claimed were focusing too much on market value and stock prices, relating the industry’s current status to that of the Evergrande property giant which spectacularly collapsed sending Chinese financial markets into disarray.

He also said cutting the price of a car model in half meant quality assurance would become impossible.

His comments were echoed by Geely chairman, Li Shufu, who said the industry was “mired in severe overcapacity” and Geely, which owns Volvo, Polestar, Zeekr and Lotus, would not be building any new factories.

Many speculate continuous rounds of price-cuts by the now-dominant BYD are forcing the hand of GWM, Geely, and the state-backed players like GAC and MG-owner, SAIC.

BYD responded to the comments from GWM’s Chairman Wei, and said there is no ‘Evergrande’ crisis and that its levels of debt were sustainable and equivalent to the likes of Ford and Toyota.

China’s industry body, the Association of Auto Manufacturers (CAAM) went so far as to suggest some Chinese manufacturers are dumping vehicles below cost and warned “there are no winners in a price war, let alone a future” for the industry.

Australia has been a beneficiary of the two-year-long ordeal, as China’s biggest automakers look for export markets to seek higher margins and as a place to offload excess supply.

As a result, there have been record-breaking price-tags attached to electric cars and plug-in hybrid models, making both more accessible to consumers, placing price pressure on incumbent top-10 players like Toyota, Mitsubishi, Kia and Hyundai.

The Geely EX-5 for example, a fully electric mid-size SUV, can be had for as little as $40,990 before on-roads, notably at price-parity with popular combustion rivals, while the incoming Chery Tiggo 7 SHS plug-in hybrid is now the most affordable PHEV available, priced at $39,990 drive-away.

It is unclear the effect that any potential Chinese government price controls may have on these local price-tags, but it will be something to watch for in the second half of 2025.