The truce in EV price war in China is officially canceled

Just when we thought the EV market in China was going to simmer down a bit, the rug got pulled out from under us. You know what they say - promises are made to be broken, especially when you're the China Association of Auto Manufacturers (CAAM).

This chaotic tale started when 16 members of CAAM, which includes the likes of Tesla, Nio, and XPeng, made a pledge to end "abnormal pricing" in the electric vehicle (EV) market. All of them agreed that this price war is not good for anybody and decided to simply put an end to it. Now, picture this, two days later, the CAAM did a U-turn and retracted the pledge. Yes, you read it right, two days. The reason, you ask? Antitrust law. Go figure.

This reversal isn't just a blip on the radar. It suggests that the EV price war initiated by Tesla – which, in a delicious twist of irony, was one of the companies that backed the pledge – will likely rage on, at least in the People’s Republic.

Interestingly, even before the ink dried on the pledge, Tesla unveiled a new version of its referral program. This included price cuts across its passenger vehicle line, coupled with app credits for Supercharger miles and entries into their official Cybertruck raffle. No sooner had that happened than CAAM, in a brief web statement, indicated that the pricing pledge had transgressed China’s antitrust law. That's a blink-and-you-miss-it turn of events.

But let's be clear, the pledge, which stood for about as long as it takes to watch a good movie, wasn't legally binding. Essentially, these automakers pinky-swore to “abide by the rules and regulations of the industry, regulate marketing activities, and not disrupt the fair competition order of the market with abnormal prices.”

Among the brands signing off on this ephemeral agreement were household names such as Dongfeng Motor, China FAW, SAIC, BAIC, Changan Automobile, GAC, Chery, JAC, Geely, China National Heavy Duty Truck, Great Wall Motor, BYD, Nio, Li Auto, Xpeng, and Tesla.

This whole go-about is adding a touch of spice to the already turbulent Chinese EV market. In fact, it seems that Tesla and BYD, amidst this pricing rollercoaster, managed to set new delivery records in the second quarter in China. To put some numbers to it, Tesla peddled 93,680 made-in-China Model 3 and Model Y units, while BYD moved 251,685 all-electric and plug-in hybrid vehicles.

All of this begs the question: Is this pledge retraction a smart move or just fuel to the raging price war fire? One thing is sure, though: the rollercoaster we came to know as the Chinese EV market shows no signs of slowing down. In fact, it seems the brakes are truly gone now - it’ll be interesting to revisit this matter in 12 months and see who survived and who became history.

Via