China’s electric vehicle (EV) market is undergoing fierce competition, with companies vying for dominance through aggressive pricing and technological advancements. Zhang Xinghai, the founder of Seres Auto and a delegate to China’s top political advisory body, has called for stronger government regulations to ensure a more orderly and sustainable market. His remarks, reported by state media on Tuesday, come at a time when China’s EV industry is experiencing unprecedented challenges and transformations.
China has emerged as the world’s largest EV market, accounting for more than 50% of global electric vehicle sales. Companies such as BYD, Nio, Xpeng, and Tesla’s China operations have been locked in fierce competition, driving prices down while accelerating technological advancements.
Zhang Xinghai, speaking at the annual session of the Chinese People’s Political Consultative Conference (CPPCC), highlighted the extreme nature of the competition, particularly in pricing and innovation. He suggested that without proper regulation, the industry could face significant risks, including price wars, financial instability among automakers, and uneven market development.
According to Zhang, the rapid growth of China’s EV industry has led to aggressive pricing strategies, with many companies selling vehicles at or below cost to gain market share. While this benefits consumers in the short term, it could drive weaker players out of business and disrupt the market.
“The government should improve regulation to ensure an orderly market,” Zhang stated, as quoted by the Securities Times. He emphasized the need for policies that would prevent predatory pricing, maintain fair competition, and support sustainable technological development.
One of the most notable trends in China’s EV market has been the intense price wars. In January 2024, Tesla initiated a major price cut on its Model 3 and Model Y vehicles in China, prompting other automakers, including BYD, Xpeng, and Nio, to follow suit. This downward pressure on prices has made EVs more affordable for consumers but has significantly squeezed profit margins for manufacturers.
Smaller and newer automakers have been hit hardest. Companies with weaker financial backing and lower production scales struggle to keep up with larger players. As a result, some EV startups have already exited the market, while others face serious financial difficulties.
Seres Auto, a rising player in China’s EV sector, has managed to stay competitive through its partnership with Huawei. Together, they have developed the Aito brand, which combines Huawei’s cutting-edge technology with Seres’ automotive expertise. However, even companies with strong backing are feeling the pressure of the ongoing price war.
Industry analysts warn that prolonged price wars could lead to market consolidation, with only a handful of dominant players remaining. While this may create a more stable industry in the long run, it could also reduce consumer choice and innovation.
Beyond pricing, Chinese automakers are locked in a race to develop the most advanced EV technology. Battery efficiency, autonomous driving, and smart vehicle integration have become key battlegrounds for differentiation.
Huawei, through its partnership with Seres, has been pushing the boundaries of smart vehicle technology. The Aito M9, launched in late 2024, features Huawei’s latest HarmonyOS system, providing an integrated smart cockpit experience. The vehicle’s AI-powered driving assistant and seamless connectivity with Huawei devices set it apart in an increasingly crowded market.
Other companies, such as BYD and Xpeng, are also heavily investing in technological innovation. BYD has developed its proprietary Blade Battery, which enhances safety and extends battery life. Xpeng, on the other hand, is advancing its autonomous driving technology, competing directly with Tesla’s Full Self-Driving (FSD) system.
With companies pouring billions into research and development, technological breakthroughs have accelerated. However, this has also increased financial strain on manufacturers, especially smaller ones that lack the resources to compete on such a scale.
The Chinese government has played a crucial role in the rapid growth of the EV industry. Over the past decade, it has provided substantial subsidies, tax incentives, and policy support to encourage the adoption of electric vehicles. However, as the market matures, the government is gradually shifting its focus from subsidies to regulation.
Zhang Xinghai’s call for improved regulation aligns with the government’s recent efforts to stabilize the market. Authorities have already introduced measures to prevent overproduction, ensure quality control, and regulate pricing strategies. For instance, China’s Ministry of Industry and Information Technology (MIIT) has been monitoring the financial health of EV companies to prevent bankruptcy shocks that could destabilize the industry.
In 2024, the government also introduced stricter safety and environmental regulations for EV batteries, ensuring that manufacturers meet higher standards. Additionally, there have been discussions about implementing policies to curb excessive price wars, though concrete regulations have yet to be announced.
If the government takes a more active role in regulating the industry, it could help maintain fair competition while protecting consumers and manufacturers from unsustainable market practices.
Seres Auto has gained significant attention in the EV market, largely due to its collaboration with Huawei. The Aito brand, developed jointly by the two companies, represents a fusion of automotive engineering and cutting-edge technology.
Huawei, which has faced challenges in its core telecommunications business due to U.S. sanctions, has shifted focus toward the automotive sector. Through partnerships with automakers like Seres, Huawei has been able to integrate its software, sensors, and AI-driven technology into EVs, creating a unique selling point in the highly competitive market.
The Aito M7 and M9 models, for example, feature Huawei’s advanced driver-assistance systems (ADAS) and smart cockpit solutions. These vehicles have received positive reviews for their high-tech features, user-friendly interfaces, and smooth driving experience.
Despite these advantages, Seres still faces challenges. As a relatively smaller player compared to giants like BYD and Tesla, it must navigate the volatile market carefully. Stronger government regulations, as Zhang suggests, could help level the playing field and ensure that companies like Seres can compete fairly.
The coming years will be critical for China’s EV industry. As competition intensifies, companies will need to balance affordability, innovation, and profitability. While price wars have driven EV adoption, they have also created financial risks for automakers.
Technology will continue to play a central role, with advancements in battery efficiency, autonomous driving, and smart connectivity shaping the future of EVs. Companies that can stay ahead in these areas while maintaining financial stability are likely to emerge as market leaders.
Government intervention, as suggested by Zhang Xinghai, could be the key to ensuring long-term sustainability. Striking a balance between free-market competition and regulatory oversight will be crucial in maintaining China’s position as a global leader in the EV industry.
As automakers, policymakers, and consumers navigate this evolving landscape, one thing is certain: China’s EV market is in the midst of a transformation that will define the future of transportation, both domestically and globally.
