China Ends Auto Price War with Ban on Below-Cost Car Sales

China Ends Auto Price War with Ban on Below-Cost Car Sales

On February 12, 2026, the electric vehicle industry witnessed a surprising and historic decision by China’s State Administration for Market Regulation (SAMR), prohibiting the sale of vehicles below their actual production cost. This bold move aimed to end the destructive “price war” waged for years by giants like China’s BYD and the US’s Tesla, which had bankrupted hundreds of small and medium-sized suppliers and crippled the industry’s innovation capabilities. Businesses in this sector are clearly shifting from a reckless “growth at any cost” approach to a more prudent “operational sustainability” strategy, with governments intervening to enforce reasonable profit margins that ensure the survival of integrated supply chains and the overall health of the sector. Price War: Hidden Devastation The “price war” in the electric vehicle industry was not merely fierce commercial competition; it was a destructive war of attrition that harmed everyone. BYD, the state-backed Chinese giant, slash…