The Chinese automotive industry is standing at a crossroads, with the entire industry experiencing a decline in profits due to price wars and new incremental space brought about by globalization. This storm, initiated by BYD, is reshaping the entire industry.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

In May, BYD launched a new wave of price attacks, with even greater reductions in price and coverage compared to last year. 22 models from Wangchao Network and Haiyang Network have launched new preferential policies, among which the starting price of Qin PLUS DM-i Intelligent Driving Edition has been reduced to 63800 yuan; The starting price of Qin L DM-i is discounted by 20000 yuan, bringing it to 79800 yuan; The starting price of the Seal 06 DM-i is discounted by 23000 yuan, bringing it to 76800 yuan; The starting price of the Seagull Intelligent Driving Edition is discounted by 14000 yuan, dropping to 55800 yuan.

This is BYD's third large-scale price reduction since 2023, shaking the entire industry.

At the same time, Wei Jianjun, Chairman of Great Wall Motors, issued a warning: "The 'Evergrande' in the automotive industry already exists, it's just that it hasn't exploded." He pointed out that large-scale pure electric vehicles are suffering serious losses and cannot form a commercial closed loop. After capital is cashed out and left, the industry will only be left with an empty shell of 'losing money to make noise'.

BYD's strategic logic technology integration and scale effect dual wheel drive

BYD's price war is not a momentary impulse, but a carefully planned "technology+scale" dual offensive. From January to April 2025, BYD's sales reached 1.38 million vehicles, a year-on-year increase of 47%. Although BYD's sales increased by nearly 60% in the first quarter of this year, its bicycle revenue decreased by nearly 15%, and its gross profit margin remained high.

This contrasting data reveals its strategic essence: supporting low price strategies with high gross margins, actively compressing profit margins, and squeezing competitors' survival space.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

Vertical integration mode is BYD's core weapon. Japanese company disassembles the Sea Lion model and finds that its eight in one electric drive system reduces wiring harness length by 40%, while CTB battery integration technology improves body rigidity by 30% while reducing manufacturing costs.

BYD has even incorporated modules such as in car information systems and high-voltage systems, which were originally collaboratively developed by multiple suppliers, into its own research and production. According to the supplier manager, "supplying to BYD does not require frequent adjustments to the plan, and stable orders allow for learning of technology.

The production capacity layout is more ambitious. BYD has planned 18 bases globally, and among the 9 major bases in China, the annual production capacity of its factories in Zhengzhou, Hefei, and Xi'an exceeds one million vehicles, with reserved space for expansion.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

The economies of scale bring astonishing cost advantages - when the monthly production capacity of the Zhengzhou base increased from 30000 to 60000 vehicles, the cost of battery packs plummeted from 8000 yuan to 6500 yuan. Industry calculations show that BYD can afford an additional 8% -10% price reduction space per car compared to its competitors.

The essence of BYD's price reduction is to transform the efficiency of the industrial chain into market dominance. The price of lithium carbonate plummeted from 600000 yuan/ton to 63000 yuan/ton, causing BYD's bicycle battery costs to drop by 36000 yuan.

The vertical integration mode of self-produced batteries and chips enables the self supply rate of the three electric system to exceed 80%, and the marginal cost is 12% -15% lower than that of outsourcing.

The double-edged sword of price war: hidden concerns about declining profit margins in the industry

The price reduction wave initiated by BYD is devouring the profit margins of the entire industry. The profit margin of the automotive industry in 2024 is only 4.3%, a decrease of 0.7 percentage points from 2023, far below the national average of 6% for industrial enterprises.

According to data from the China Association of Automobile Manufacturers, the profit of the automotive industry decreased by 7.3% year-on-year from January to November 2024. This' involution 'competition has attracted high attention from regulatory authorities.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

The National Development and Reform Commission pointed out that some industries have structural problems of "breaking through market competition boundaries and bottom lines", distorting market mechanisms, and disrupting fair competition order. The Central Political Bureau meeting in July 2024 first proposed to prevent "involution style" vicious competition, and the Central Economic Work Conference in December further called for comprehensive rectification of such chaos.

Faced with BYD's price reduction, competitors are in a dilemma. A senior executive of a certain new force admitted, 'If we follow up with price cuts, the gross profit margin will directly turn negative; if it doesn't decrease, the market below 100000 yuan will be basically wiped out.'. Real data confirms this dilemma - in April 2025, the sales of a certain cost-effective brand decreased by 37% year-on-year.

Industry differentiation is a matter of life and death. Who is swimming naked and who is building walls

The price war is accelerating the industry reshuffle, and the head effect is becoming increasingly prominent. In the first quarter of 2025, BYD's domestic sales exceeded 1 million vehicles, with a year-on-year increase of 59.8%.

During the same period, the growth rate of competitors such as Geely and Great Wall was less than 10%. According to data from the China Association of Automobile Manufacturers, BYD's market share has remained stable at one-third, far exceeding the second place by 21 percentage points.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

Different car companies have chosen vastly different survival strategies. Huawei (HarmonyOS) adheres to the high barrier technology route, and its Zunjie S800 is equipped with L3 intelligent driving assistance architecture, which defines market height through technological depth. The average transaction price has ranked first for 9 consecutive months.

Xiaopeng Motors has chosen to face the challenge head-on, launching the MONA M03 model starting at 119800 yuan, with a year-on-year sales growth of 94.6%, trading scale for time. Ideal Automobile focuses on household users and consolidates its segmented market through range extender technology, maintaining a high gross profit margin of 20.5%.

Joint venture brands have fallen into strategic confusion. Some once popular joint venture models have lowered their prices by more than 30%, but it is still difficult to prevent a decline in sales, and 80% of fuel powered models are facing delisting.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

When BYD equipped its 100000 yuan model with L2+intelligent driving assistance as standard, the configuration premium of joint venture fuel vehicles completely collapsed. Changan Automobile Chairman Zhu Huarong predicts that "the Chinese automotive industry will not exceed two years and will return to a state of healthy competition. Li Shufu, Chairman of Geely Holding Group, has clearly put forward the "two oppositions, two adherences, and six battles": opposing vicious competition through internal competition and opposing bottomless business practices; Adhere to open and healthy competition, and persist in not engaging in price wars; We need to engage in value wars, technology wars, quality wars, service wars, brand wars, and corporate ethics wars.

The way to break through globalization: from price internalization to value output

When competition in the domestic market intensifies, overseas markets become the new blue ocean for Chinese car companies. In the first quarter of 2025, BYD surpassed Toyota and Tesla for the first time with 2500 registered vehicles in Hong Kong, China, occupying over 30% of the local market share.

In the Thai market, BYD ranks first with 8800 new energy vehicle sales; In Brazil, sales exceeded 20000 vehicles in the first quarter, a year-on-year increase of over 160%.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

China's automobile exports are undergoing a qualitative change. In 2024, BYD's overseas sales reached 417000 vehicles, a year-on-year increase of 71.8%, with products covering more than 100 countries and regions on six continents worldwide. In the first quarter of 2025, BYD's export volume reached 214000 vehicles, accounting for 48.5% of China's total new energy vehicle exports during the same period.

The globalization strategy presents two typical paths: one is BYD's localized manufacturing model, which sets up passenger car factories in Hungary, Thailand, Brazil and other places to achieve "local production, local sales".

Another type is Geely's global R&D system, which is located in five design centers in Shanghai, Ningbo, Milan, Gothenburg, and Coventry, forming a cross-cultural design ecosystem.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

The output of technical standards has become the core competitiveness. The Geely Galaxy E5, based on GEA intelligent architecture, has obtained dual five-star security certifications from ENCAP in Europe and ANCAP in Australia, and has been exported to 7 countries including Australia and Indonesia.

BYD has launched four pure electric commercial vehicles equipped with blade batteries in the UAE market, accurately solving the challenges of range and safety in high-temperature environments.

Wei Jianjun, Chairman of Great Wall Motors, pointed out that "a strong automotive country needs to provide diversified travel solutions for the global market. Electric vehicles are not omnipotent in overseas markets and cannot completely replace other forms of energy. Li Shufu, Chairman of Geely Holding Group, emphasized the importance of global compliance: "We must obey and respect the new reality of globalization and adapt to the new laws of survival.

After the chaos, Dazhi went from a price war to a value war

The automotive industry is experiencing painful transformation pains, but it is also a necessary path towards maturity. Changan Automobile Chairman Zhu Huarong's judgment is quite representative: "When an industry develops to a stage of intense competition, it is about to enter a healthy stage, not the end.

Policy guidance is playing a crucial role. According to data from the Ministry of Commerce, as of December 19, 2024, nearly 2.7 million scrapped cars and over 3.1 million replacement cars have been updated nationwide, and the 11.2 billion yuan subsidy policy has effectively activated the market. In 2025, the Central Economic Work Conference has clearly stated the need to strengthen the implementation of the "two new" (trade in for new, scrap and update) policies.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

Technological innovation will become a watershed. BYD's "Eye of Heaven" intelligent driving assistance system has accumulated data from 4.4 million L2+level vehicles; Its e-platform 3.0 high-voltage platform and 10C "megawatt flash charging" technology build intergenerational advantages.

Huawei's ADS intelligent driving assistance solution achieves autonomous driving capability on urban roads through the fusion of multiple sensors such as LiDAR, cameras, and millimeter wave radar.

The industry ecosystem will evolve towards two poles. On the one hand, "scale giants" represented by BYD and Tesla rely on their vertical integration capabilities to control costs; On the other hand, players with technological differentiation such as Ideal and Huawei are establishing barriers in segmented markets.

As Wang Chuanfu, Chairman and President of BYD Group, said, "The ultimate goal of new energy vehicles is to completely replace gasoline vehicles, and price is the final barrier. When technological equality becomes a reality, the real winners will be those companies that can sustain innovation, balance scale and profit, and establish brand value in the global market.

The future pattern of China's automobile industry is gradually becoming clear in the smoke of price wars. Leading car companies such as BYD have built high walls with their vertical integration capabilities, while players such as Ideal and Huawei have established technological barriers in segmented markets. Tail end brands are struggling to survive in profit compression, and industry reshuffling is accelerating.

The ultimate outcome of the automotive industry will not be dominated by the lowest priced companies, but by those that perfectly integrate Chinese manufacturing efficiency with global market insights.

Is the automotive industry undergoing a major reshuffle and internal competition behind the price war or a rebirth?

When BYD's roll on/roll off ships sail towards the world, and when Geely Milan Design Center injects Eastern charm into global car models, the value output of China's automotive industry has just set sail.