The Ministry of Industry and Information Technology announced on May 31 that the price war among the country’s new energy vehicle (NEV) firms should come to an end as no manufacturers can win out amid the vicious competition. The warning was issued as the price-slashing strategies adopted by NEV makers have overwhelmed the domestic market where the profits are squeezed. In the first quarter of this year, NEV production and sales grew by 50.4 and 47.1 percent, but the profit rate of the entire industry was only 3.9 percent. The low margins have put pressure on inventories and hindered research and development. Meanwhile, it also risks the financial fluidity of the automakers whose debts are mounting. Experts suggest domestic automakers should learn from overseas experience, such as Toyota’s “lean production” and Tesla’s mega-casting manufacturing processes, to reduce inventory and enhance competitiveness.
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