China's State Council Meeting Addresses Healthy Development of the New Energy Vehicle Industry

According to Xinhua News Agency, the State Council held a meeting on July 16 that emphasized the need to focus on promoting the high-quality development of the new energy vehicle (NEV) industry. It addressed various irrational competition phenomena in the sector and insisted on combining long-term and short-term strategies to effectively standardize the competition order within the NEV industry. On July 17, Ye Shengji, Chief Engineer of the China Association of Automobile Manufacturers, stated in an interview with the Daily Economic News that the meeting is significant for the healthy and long-term development of China's NEV industry and for curbing 'involutionary' competition. He believes that with the strong support and coordinated efforts of relevant departments as well as stakeholders in the Chinese automotive industry chain, the issues currently facing the NEV industry will be effectively resolved, promoting a sustainable and high-quality development of the automotive sector in China. Ji Xuehong, Director of the Automotive Industry Innovation Research Center at Beifang University of Technology, also expressed that the current efforts against 'involutionary' competition are not only being taken seriously by industry regulators but have also gained attention at the State Council level, leading to effective control over chaotic 'price wars' in the NEV sector. The report highlighted that over 60 vehicle models had price reductions in the domestic market in the first four months of 2025 alone, and the price war intensified in May, with leading automakers significantly slashing prices, prompting others to follow suit, resulting in over a hundred models being discounted by more than 50,000 yuan. Ye Shengji described 'involutionary' competition as unfair and abnormal, posing severe harm to the development of the entire industry. Cui Dongshu, Secretary-General of the Passenger Car Association, characterized the situation as 'severe' and called for strict measures from relevant authorities to address the issue. The State Council meeting specifically called for strengthening cost investigations and price monitoring to tackle the disordered price competition in the NEV market. This move is expected to effectively control the chaotic pricing, particularly ensuring that the cost structure remains within a reasonable range. Wang Tie, Director of the China Automotive Strategy and Policy Research Center, stated that cost investigations and price monitoring are necessary tools to expose unreasonable pricing behaviors and promptly identify price fluctuations. He emphasized that the NEV sector should pursue orderly and fair competition, highlighting that there is no rationale or capital for 'involution' in the industry. The meeting also pointed out the need to enhance supervision of product production consistency to prevent companies from compromising on product configuration, safety, and environmental performance, thereby safeguarding product quality and consumer rights. In June, the Ministry of Industry and Information Technology announced plans for consistency supervision in vehicle production for the year 2025, aiming to standardize production, marketing, and curb price involution. In June, 17 key automotive companies pledged to limit payment terms to suppliers to no more than 60 days, representing a significant step against 'involutionary' competition in the automotive industry. The Ministry also opened a complaint platform for small and medium-sized enterprises to report issues regarding the enforcement of payment commitments by key automotive companies. The State Council meeting reiterated the importance of ensuring that key automotive companies adhere to their payment commitments, which is crucial for stabilizing the cash flow of small and medium-sized enterprises and improving the industry's ecosystem.