China's car price war cost industry as much as $68bn in 3 years
Nikkei Asia: China’s three-year car price war erased up to 471bn yuan ($68bn) in revenue, sparked by Tesla cuts and eased by Beijing curbs
HONG KONG -- A bruising price war in China's auto market wiped out up to more than 471 billion yuan ($68 billion) in industrywide revenue over the past three years, a new research report estimates.
Carmakers and dealers have borne enormous costs stemming from price cuts they offered between 2023 and 2025, according to the study published Monday by Li Yanwei, a member of the China Automobile Dealers Association.
Since Tesla fired the first salvo of a discount spree in the world's largest car market in early 2023, homegrown rivals and foreign marques have been forced to follow suit, aggressively marking down their lineups.
Li estimated the total cost by applying price markdowns to initial auto retail prices in January 2023 and multiplying them by sales volume over the three-year period. The average price of cars sold in China dropped 11%, from 217,000 yuan per vehicle in 2023 to 194,000 yuan in 2025, his calculations show.
"The price war is definitely not a short-term marketing campaign," Li said. It has "profoundly reshaped the industry's competition landscape."
The cut-throat price competition drew attention from Beijing and ultimately triggered a regulatory crackdown last June, with authorities summoning car companies to warn them against fierce price reductions and mounting unpaid bills to suppliers.
Li's research suggests the regulatory measures have eased the discount war, enabling the industry to recover as much as 20 billion yuan in revenue that would have been lost in the second half of 2025, compared with the first half.
Citi analysts do not anticipate "further significant price cuts" in 2026, citing customers' heightened price insensitivity, rising raw material costs and Beijing's "anti-involution" measures aimed at curbing unsustainable competition.
"These factors, combined with intense new model launches, are expected to drive industry consolidation," they wrote in a research note last month.
Still, carmakers have responded with more subtle approaches to discounts. In January, Tesla announced a five-year, zero-interest financing plan for Chinese buyers of its best-selling Model Y L car for the first time. A number of Chinese brands, including Zeekr, Li Auto and Huawei-backed Aito, promised to offer customers compensation for the phase-out of the Chinese government's tax subsidies in 2026.
BYD took a different tack, upgrading some of its existing models with extended battery ranges and more advanced features, while keeping the price tags unchanged.
