“In a price war, if a company sells far below the cost, or sells at a loss, it must have a source. The first is the shoddy quality of related materials when building a car. Just recently, Dong Yang, former executive vice president and secretary-general of the China Association of Automobile Manufacturers, pointed out the pain points of the industry when asked “what harm will be caused by the automobile price war in the end”.
In July, as the bank’s “high interest rate and high return” policy was stopped, all multi-brand models announced price increases one after another, which some people interpreted as a signal that the price war was stalled, believing that China’s auto industry would enter a new stage of “technology density competition”, but some people were pessimisticforecast, this is just the calm before the storm. In particular, product quality concerns left over from years of price wars continue.
Market squeeze and survival choice
At the beginning of 2025, the “battle damage report” of China’s auto market is terrifying. According to the latest data released by the China Association of Automobile Manufacturers, although the overall sales in the Chinese market from January to May barely stood firm at 12.748 million units, an increase of about 10.9% over the same period last year. However, under the stable and positive industry operation trend, the involution has already spread to all aspects of price and product strength.
High inventory has led to pressure on the cash flow of car companies.According to the latest monitoring data from the China Automobile Dealers Association, the dealer inventory warning index will still be high at 56.6% in June 2025.Under the pressure of inventory, the price war has become the only “fast-acting drug”.
In a new round of price cuts with May 23 as the tipping point, behind the results of BYD Seagull Intelligent Driving Edition winning 30,000 orders in two weeks is the cruel reality that entry-level models are approaching or even breaking through the cost line. However, behind the applause of consumers and market expansion, the industry is filled with anxiety, will the core quality of the car at such a price be shaken?
“The endless price war is the core of destroying industrial development, destroying the ecology of healthy industrial development, and making the entire industry profitless. The price war keeps fighting, you can’t win, you can’t fight! Vehicle enterprises should be responsible for the industry and the sustainable development of enterprises.In this regard, Fu Wu, honorary chairman of the China Society of Automotive Engineers, China Automobile Talent Research Association, and chairman of the China Automobile Culture Foundation, has a clear attitude.
Image source: China Automobile Dealers Association
From an industry perspective, the price war has led to a serious compression of the profit margins of car companies and dealers. According to data from the National Bureau of Statistics,Although the profit margin of the automotive industry in January-May 2025 was the same as in 2024 (4.3%), profit fell by 11.9% compared to the same period last year, which is lower than the manufacturing average。 Falling profits may lead car companies to reduce R&D investment, affect product quality and technological innovation, and hinder the sustainable development of the industry.
When Volkswagen exclaims that “cars are sold at the price of cabbage”, the bottom of the industrial chain is experiencing a cruel cost strangulation.
LightweightOr cost-effective?
With the release of the new Xiaomi YU7 car, the discussion of “copper to aluminum” of automotive high-voltage wiring harness materials has once again been pushed to the center of public opinion. Recently, in a post on Xiaomi YU7 “micro-science”, six major “things to know” were listed, one of which is “the only cars in the world that dare to use high-voltage aluminum wires are Xiaomi and Tesla, but the length of Tesla’s wiring harness is only one-third of most trams, and Xiaomi dares to use it I can’t understand.” ”
In fact, such topics are not new. Back in the days when Xiaomi SU7 was born last year, its huge market volume not only defined what “circle-breaking traffic” was, but also pushed the automotive wiring harness, a core component hidden inside the body but related to safety and performance, into the spotlight, attracting unprecedented public attention.
At that time, public opinion was clearly divided. The industry represented by Xiaomi Auto clearly pointed out that under the condition of achieving the same resistance or current-carrying capacity, the mass of aluminum alloy wiring harness is about half that of copper wiring harness. Not only that, the comprehensive cost advantage of aluminum is more significant, about one-sixth of copper. What is particularly important is that Xiaomi SU7 is not the first case in the industry, but has passed through Tesla, BYD and othersNew energyA more mature solution verified by car companies.
Schematic diagram of automobile wiring harness section; Image credit: Lenny
At the same time, Gasgoo specially invited a number of relevant industry technical experts to analyze that “copper to aluminum” is needed for industrial development rather than simple cost reduction from multiple levels such as technological development trends, lightweighting, and costs, but it is still difficult to completely dispel the suspicions of the consumer side about “reduction” and “downgrade”.
They analyzed that the tensile strength of aluminum conductors is generally lower than that of copper conductors, which is crucial in complex automotive environments, which explains why aluminum harnesses are often supplemented with reinforcing elements (alloying) to improve performance. At the same time, the intrinsic conductivity of aluminum conductors is lower than that of copper, and the ampacity carrying capacity of pure aluminum wires is about 25% lower than that of copper wires under the same specification cross-section. Therefore, in order to achieve the equivalent or even exceed the current carrying capacity of copper wire, moderately increasing the cross-sectional area of aluminum wire is currently a commonly used engineering solution in the industry.
Schematic diagram of the layout of the whole vehicle wiring harness; Image credit: Lenny
Based on the above technical difficulties, some analysts believe thatCompared with the marginal benefits brought by lightweighting, cost-effectiveness is more likely to drive car companies to choose aluminum wiring harness solutions.
When this material substitution strategy is applied to high-voltage systems for pure electric vehicles with extremely high requirements for energy transmission safety and reliability, it naturally raises deep concerns about safety. Now, as the Xiaomi YU7 is about to start large-scale deliveries, this concern seems to be heating up instead of subsiding.
Extending from the repeated debates caused by “copper to aluminum”, similar technical details controversies are highly focused at presentNew energy vehiclesThe field doesn’t stop there. This tension between the choice of technical route and consumer cognition has become a microcosm of the industrial development process.
allocation reduction, fraud, supply chain squeezing
What really puts “cutting corners” on the table is the end of the executives and industry experts of major enterprises, who have personally punctured the fig leaf of industrial development.
Among them, Wei Jianjun, chairman of Great Wall Motors, is particularly straightforward. Earlier this year, in an interview with the media, he questioned when he talked about some car companies dropping product prices from 220,000-230,000 yuan to 120,000-130,000 yuan.What kind of industrial products can be reduced by 100,000 yuan and still get quality assurance? This is absolutely impossible。 In his view, this cliff-like price reduction must come at the expense of product quality and safety.
“Rising and falling secretly” seems to have become a common practice of some car companies. Especially in the field of intelligent driving, companies do their best to package assisted driving technology as leading “black technology” in marketing, and manufacture technology gimmicks to attract traffic.
However, in the mass production process, the number of key sensors (such as lidar) is greatly reduced, or low-cost computing platforms with serious insufficient computing power are used, resulting in the actual realization and reliability of the user’s actual experience being far lower than the publicity promise, constituting a substantial false publicity and user experience gap.
More common reductions occur in areas that are not noticeable to consumers or difficult to perceive in the short term.
Taking seats as an example, a large number of car companies have abandoned investment costs for complex internal structural support research, ergonomic optimization and durability testing, and instead adopted a simple “one soft to the end” filling strategy. Although this design can bring initial soft comfort, it sacrifices the support, comfort and durability of long-term riding, and the R&D cost is ruthlessly compressed.
Window glass has also become the hardest hit area for cost reduction. The coated glass with excellent sound and heat insulation performance has been replaced with ordinary glass, and even the thickness has been reduced, which directly leads to a decrease in the vehicle’s NVH (noise, vibration and harshness) performance, and the cabin heats up rapidly after summer exposure.
Image source: Photo.com
Where consumers can’t see it, cost cuts are more unscrupulous. The spare tire is made of miscellaneous brands or inferior products, the materials used for soundproof cotton are inferior and the coverage area has been greatly reduced, the lightweight, high-strength aluminum alloy in the body structural parts has been quietly replaced with heavier steel, and the car screws have been replaced with iron, which not only increases the weight but also greatly reduces the life.
These countless “detail optimizations” converge into a huge cost depression, but they bury hidden dangers in the safety, reliability, durability and long-term use quality of the vehicle.
What is particularly critical is that the cost pressure endured by OEMs in the price war is not digested by relying on their own technological upgrades or efficiency revolutions, but is roughly passed on to the upstream and downstream of the industrial chain, especially parts suppliers. This has led to a sharp deterioration of the supply chain ecological environment.
This endless cost squeeze suffocates suppliers, forcing them to seek extremely dangerous cost reduction paths under survival pressure, forming “OEMs squeeze suppliers → Supplier quality declines → Vehicle quality and reliability are damaged → Brand reputation and reputation decline → Have to continue to fight price wars → further squeeze suppliersThe vicious circle of “.
Who is destroying the future of Chinese cars
According to a number of research reports released by J.D. Power, including the “China New Car Quality Study (IQS)”, “Vehicle Reliability Study (VDS)” and “China Automobile After-sales Service Satisfaction Study (CSI)”, it has repeatedly pointed out thatProduct quality and service qualityIt is a key factor for Chinese auto brands to narrow the gap with international brands.
The frequently exposed quality problems will undoubtedly affect consumers’ overall impression and satisfaction with Chinese brand cars. This is especially exposed in the process of Chinese car brands going overseas. The quality downgrade brought about by the ultimate pursuit of cost has directly damaged the long-term value and brand image of the vehicle.
The latest overseas market data is sobering.According to Thai market data in 2025, the average residual value rate of Chinese brand cars is only 28%, which is far lower than the level of 52% of Japanese brands.The residual value rate is not only an important consideration for consumers’ car purchase costs, but also a direct reflection of brand value and market confidence.
Such a huge gap clearly shows that products born under cruel involution have been labeled as “cheap and low-quality”, “not durable” and “do not retain value”, and are rapidly building a negative impression of “Made in China” cars in overseas markets. This not only seriously damages the property rights and interests of consumers, but also deals a heavy blow to the brand power, premium ability and long-term competitiveness of China’s automobile industry that has been hard to accumulate in the global market.
Wei Jianjun’s warning is by no means alarmist. China’s automobile industry under the digital halo of 30 million production and sales is standing at a crossroads of development.The “crazy price war” at the cost of sacrificing product quality, squeezing partners, overdrawing business integrity, and harming consumer rights and interests is a disorderly involution with no winners and self-destruction.When allocation reduction becomes the standard, fraud replaces integrity, the supply chain is on the verge of collapse, and no matter how huge short-term sales are, it is difficult to support a sustainable and healthy future.
Based on this, not only Wei Jianjun stood up.
“‘Involution’s competition endangers the stability of the supply chain, reduces the quality and safety standards of parts, leads to the weakening of the profitability of vehicle companies, reduces innovation investment, and weakens product quality and safety.‘Involution’ competition affects the coordination of the industrial chain, weakens industrial resilience and endogenous power, and is not conducive to the sustainable development of the industry.Zhang Xinghai, chairman of Cialis Group, said.
He Xianqing, deputy general manager of GAC Group, bluntly said when talking about the price war at the 2025 (3rd) Future Automobile Pioneers ConferenceYou get what you pay for, and the price is the embodiment of value.
The industry consensus is thatThe advantages established in cutting-edge technology fields such as intelligent driving and high-energy density batteries are very likely to be lowered by low-quality products.With the expansion of the scale of Chinese automobiles going overseas, the increase in negative feedback caused by quality problems will seriously damage the image of Chinese automobiles in overseas markets and become a huge obstacle to their globalization goals.
On June 29, the front page headline of the People’s Daily pointed out with the headline “Achieving High-quality Development in Breaking the “Involution” Competition:In order to reduce prices and costs, some companies cut corners, reduce quality and allocation, follow the trend, plagiarize patents, and maliciously smear and falsely publicize. Bad money drives out good money, and the industrial ecology needs to be optimized urgently.”
Image source: Photo.com
The top priority of the industry is to return to the essence of the manufacturing industry – unswervingly rely on real technological innovation, create reliable and excellent product quality, and build a healthy industrial ecology of mutual trust and win-win results. Only in this way can we build an indestructible core competitiveness in the rapidly changing global automobile industry pattern, win the long-term trust of consumers at home and abroad, and finally achieve qualitative changes from “quantity” to “quality”, from “involution” to “upward”.
The end of this vicious circle requires not only reflection, but also in-depth adjustment and consensus action of the entire industry from strategy to execution.
Thunderous measures at the policy level have drawn a red line for the industry. On the evening of June 9, 2025, the Ministry of Industry and Information Technology issued a notice on organizing and carrying out the supervision and inspection of road motor vehicle manufacturers and product production consistency in 2025. Among them, it is emphasized that it will adhere to the problem orientation and increase the intensity of spot checks on models with high public attention and large quality and safety hazards.
This battle related to the future of the industry is not only a test of the strategic determination of enterprises, but also the belief in “long-termism” of the entire industry. When the smoke of the price war dissipates, only enterprises that adhere to the bottom line of quality and continue technological innovation can break the waves in the future journey of China’s automobile industry.