China's EV price war ends

China’s electric-vehicle market is entering a different phase from the one that defined the past two years. Reports in May said Chinese manufacturers were beginning to raise prices or reduce discounts as supply-chain costs increased, ending a stretch in which aggressive cuts helped drive a bruising domestic price war. At the same time, the International Energy Agency said electric-car sales topped 20 million globally in 2025, equal to one in four new cars sold worldwide. Together, those two developments show a market that is still expanding quickly, even as the economics inside China become less favorable for buyers. ### Why are Chinese EV prices rising after years of cuts? DigiTimes reported on May 21 that China’s EV market was moving out of a “price war” phase and into one of rising costs, with retail prices heading higher. March 17 provided an earlier signal from policymakers. The South China Morning Post reported that China’s Ministry of Industry and Information Technology, the National Development and Reform Commission and the State Administration for Market Regulation convened 17 major carmakers and urged them to regulate competition and move away from aggressive discounting. (digitimes.com) The same March meeting also focused on supplier payments. Chinese officials said carmakers should honor a 60-day payment-cycle commitment, and the China Association of Automobile Manufacturers said in a February 2026 progress report that the 17 companies had reduced average payment cycles to 54 days. (scmp.com) ### Does that mean EV demand is slowing? China still dominates the market by volume. The IEA said electric-car sales in China exceeded 11 million in 2024 and that almost half of China’s car sales were electric that year. In the first two months of 2026, however, China sold more than 1.7 million new-energy vehicles, down 7% from a year earlier, the South China Morning Post reported, citing pressure from cooling demand and the end of the 10% sales-tax exemption. (scmp.com) Beijing has tried to support demand through trade-in subsidies. (iea.org) The vehicle trade-in scheme was renewed at the end of 2025, with higher incentives for buyers choosing new-energy models, according to the South China Morning Post. ### How fast is the global EV market still growing? (scmp.com) The International Energy Agency said in its Global EV Outlook 2026 that electric-car sales exceeded 20 million in 2025, up 20% from 2024, and that one in four new cars sold worldwide was electric. The same IEA report said China’s growth slowed somewhat in 2025 because of a temporary halt to its trade-in scheme, but EVs still accounted for nearly 55% of all car sales there. (scmp.com) Europe’s EV sales rose more than 30% and reached 28% of total sales, the agency said. For 2026, the IEA forecasts 23 million electric-car sales worldwide, or nearly 30% of all new cars sold. (iea.org) ### What changes if China’s price war is ending? Higher prices in China would matter because the country has been the industry’s main source of scale and low-cost supply. The IEA said China accounted for almost two-thirds of global electric-car sales in 2024, up from half in 2021. (iea.org) Chinese officials have also been explicit about the direction they want. (iea.org) The South China Morning Post reported that regulators urged carmakers to shift from price-based competition toward innovation-led growth, including work on automotive chips, foundational software and self-driving systems. (iea.org) That does not mean cheap Chinese EVs disappear. It means the next stage may depend less on repeated discounting and more on production scale, model mix, subsidies and export strategy, an inference supported by the policy push away from destructive price competition and by the IEA’s forecast for continued global sales growth. (scmp.com) ### What should readers watch next? The IEA’s next major reference point is its 2026 sales forecast of 23 million electric cars worldwide and a global market share close to 30%. In China, the next concrete test will be whether automakers keep raising sticker prices or trimming discounts through the rest of 2026 while the trade-in subsidy program remains in place and regulators keep pressing manufacturers to stabilize competition. (scmp.com) (digitimes.com) (iea.org)