Chinese automakers commit to fast supplier payments amid EV price war

In March 2025, Chinese authorities implemented new regulations mandating companies to settle payments to suppliers within 60 days, with the deadline coming into effect on June 1, 2025. This initiative was introduced in response to a growing price war among Chinese electric vehicle (EV) manufacturers, coupled with rising concerns about the stability of supply chains. Industry reports indicate that the ongoing competitive pricing strategies have exerted significant pressure on manufacturers, leading them to seek price reductions from suppliers that can reach as high as 10%. The Iron and Steel Association of China has voiced its concerns regarding this price war, suggesting that automakers need to look towards Japanese manufacturers for inspiration. The Japanese auto industry typically maintains a portion of profits for suppliers, ensuring both product quality and innovation in a more collaborative manner. The association believes that adopting such practices can enhance sustainability within the automotive sector. Recently, a dealer for BYD in Shandong province closed down 20 outlets due to changes in dealership policies, highlighting the tumultuous environment in which these companies operate. Despite setbacks, the fierce price competition among automakers persists, exemplified by BYD’s release of the Seal 06 EV Sedan at a price point of $15,000, which significantly undercuts Tesla's Model 3, the lowest-priced offering from the American manufacturer in China. The shift in the automotive market dynamics illustrates a significant transformation in China's driving landscape, potentially resulting in lasting impacts on consumer behavior and industry practices. The Chinese Communist Party also remarked on this situation, expressing apprehension about the ongoing “rat race” among car manufacturers and urging a more balanced approach to pricing that would safeguard supply chain integrity.