The price war in the automotive industry has suddenly come to a halt.

Tomorrow, the Beijing Auto Show will open. With an exhibition area of 380,000 square meters, nearly a thousand automobile companies, and 181 world premiere vehicles, it has become the world's largest auto show in terms of scale.

However, outside the exhibition hall, something unusual is happening in the Chinese automobile market.

No company has announced a price increase. But almost all companies have stopped offering price cuts.

Discounts are disappearing, subsidies are being withdrawn, and the terminal quotes are gradually rising. There is no fanfare, no unified statement, but an astonishing consensus.

The figures are clear. Since the beginning of this year, nearly 20 new energy vehicle companies have raised their product prices or reduced terminal discounts, with price increases ranging from 2,000 to 10,000 yuan. The long - range version of Tesla Model Y has increased by 18,000 yuan, multiple models of BYD's Dynasty and Ocean series have seen price increases of 3,000 to 6,000 yuan, and the entire new Xiaomi SU7 series has increased by 4,000 yuan.

NIO, ZEEKR, and XPeng have also clearly signaled that their new cars will no longer follow the low - price strategy.

If we only look at individual actions, it seems like a scattered price adjustment. But when we put them together, we'll find a more dangerous fact: Automobile companies don't want to raise prices; they simply can't afford to cut prices anymore.

The question is, why now?

I. The price war can't go on

In the past three years, the Chinese new energy vehicle industry has undergone an extreme competition experiment. Every automobile company has been doing the same thing: reducing prices as soon as a new car is launched, quickly clearing out old models, and suppressing competitors with both configuration and price.

Price has become the only weapon.

This logic was effective at the beginning. The market expanded rapidly, the penetration rate continued to rise, and consumers were continuously educated. However, the problem is that this model has no exit mechanism.

When all players choose to cut prices to gain market share, they will fall into a typical dilemma. If they don't cut prices, they will be left behind; if they do, they will all suffer losses.

The result is an extremely abnormal phenomenon: The more they sell, the more they lose.

From January to February this year, the overall profit margin of the Chinese automobile industry dropped to 2.9%, hitting a new low in the past decade. Before 2017, this figure was about 8%. At the 2026 High - level Forum on the Development of Intelligent Electric Vehicles, Zhao Fei, the general manager of Changan Automobile, recently told the truth: It's difficult to make a profit just by selling cars.

What's more dangerous is that consumers have started to learn to wait. They won't buy today, waiting for a lower price next month or for a price cut after a model upgrade. When waiting for price cuts becomes a purchasing habit, the price war is out of control.

The data from the first quarter confirms this. The retail sales of passenger cars nationwide decreased by 17.4% year - on - year, and the decline of new energy vehicles was even greater, reaching 21.1%. With rising prices and falling sales, the industry is under pressure from both ends.

In this melee, there is a special player that has to be mentioned: BYD.

BYD is one of the few companies that have both extreme cost control and large - scale manufacturing capabilities. With self - developed batteries, self - developed chips, and a vertically integrated supply chain, this system allows BYD to withstand the price war longer than anyone else.

But on the other hand, because it can endure, the bottom price of the entire industry has been continuously pushed down by it.

When a player has a crushing cost advantage, everyone else will be dragged into the same competitive range. Match the price, match the configuration, match the rhythm. If you don't, you're out.

This also explains why this round of price increases is more like a collective action. If only one company raises the price, it will immediately lose the market. But when everyone stops cutting prices, the industry has a chance to return to normal.

In a sense, this is a silent consensus reached by all automobile companies except BYD.

II. Three major pressures are coming simultaneously

The automobile industry is not only unable to continue the price war. More importantly, three external forces are pressing down at the same time, completely squeezing out the remaining price - cut space for automobile companies.

The first force is the battery.

The price of lithium carbonate has rebounded from about 75,000 yuan per ton at its low last year to about 170,000 yuan per ton now, an increase of nearly 130%. Just this one factor has increased the battery manufacturing cost per vehicle by 3,000 to 5,000 yuan. Batteries account for 30% to 40% of the total vehicle cost. A doubling of raw material prices means that the cost bottom line of automobile companies has been directly raised.

Moreover, this price increase is not unique to China. After hitting a low in 2024, the global lithium carbonate supply has entered a rebound cycle. Coupled with the explosive demand in the energy storage market, there is no sign of a price drop in the short term.

To see how asymmetric this cost transfer is, just look at a set of figures.

According to the first - quarter report of CATL in 2026, its single - quarter revenue reached 129.1 billion yuan, a year - on - year increase of 52%; its net profit attributable to shareholders was 20.7 billion yuan, a year - on - year increase of 49%, with a daily net profit of more than 230 million yuan. Its single - quarter performance reached a new high. In the same period, the profit margin of the entire automobile industry was only 2.9%.

Battery manufacturers are making huge profits, while automobile companies are struggling on the verge of survival. In 2025, the total profits of 11 listed large - scale automobile companies were less than that of CATL alone. Automobile manufacturers are working for battery manufacturers, and this situation has become even more prominent in the first quarter of 2026.

The second pressure comes from chips. Since the second half of 2025, the global AI computing centers have expanded explosively, frantically seizing semiconductor production capacity, and the supply of automotive - grade memory chips has been severely squeezed.

According to a UBS research report, the price of automotive - grade DRAM has increased by 180% in the past three months, and the price of DDR5 has increased by as much as 300%.

An intelligent electric vehicle is essentially a mobile computing platform, with a rigid demand for memory chips. Automobile companies find themselves competing with global AI data centers for the same batch of chips, and they can't win.

How real is this pressure? Just look at the mobile phone industry.

In March this year, mainstream mobile phone brands such as OPPO, vivo, and Honor collectively raised their prices. The prices of mid - range models increased by 300 to 500 yuan, and the prices of flagship models increased by more than 2,000 yuan. The contract price of the 8GB + 256GB storage combination has increased by nearly 200% compared with the same period last year. IDC pointed out that this is the most widespread price increase in the mobile phone industry in the past five years.

An industry that seems unrelated to the automobile industry has been forced to raise prices at the same time due to the shortage of memory chips. In 2026, the mobile phone and automobile industries have become two brothers in trouble.

Lu Fang, the chairman of Dongfeng Lantu, recently admitted at an industry forum that the rapid increase in the price of chips, especially memory chips, has brought serious troubles to the entire supply chain. "If the raw material prices continue to rise, it will eventually be passed on to the terminal." This is not a prediction but a fact that is happening.

The third pressure comes from policies. Since January 1, 2026, the purchase tax for new energy vehicles has changed from full exemption to half exemption. For a 200,000 - yuan electric vehicle, the purchase tax has changed from zero to about 8,800 yuan. In theory, this money should be borne by consumers. But under the inertia of the price war, many automobile companies have chosen to absorb a part of it, further squeezing their already thin profit margins. At the same time, some local consumption - promotion subsidies have expired or been tightened, and the shielding effect of policy dividends on the profits of automobile companies is also weakening.

With these three major pressures overlapping, automobile companies have no room to continue cutting prices. The price increase is a forced move.

III. Li Xiang, opening a new battlefield

The turning point of an industry often doesn't start with data but with people.

The most iconic scene in April this year came from Li Xiang, the founder of Li Auto. He posted multiple dynamic posts on his WeChat Moments, publicly accusing a Japanese automobile company of hiring online trolls to smear Li Auto. His language was so intense that he used expressions like "collaborators are worse than invaders".

A few days later, Lei Jun also sighed during a 15 - hour battery - life live - stream that Xiaomi Auto is one of the most smeared brands on the Internet.

In an industry where expressions are highly restrained, such public accusations are a signal in themselves. It shows that the competition has spilled over from price to public opinion. When the price is pushed to the limit, companies have no more room to win through price cuts. So they start to focus on content, word - of - mouth, evaluation systems, and even cognitive manipulation.

The competition has become more hidden and more intense.

Li Xiang's anger is not just an emotional issue; it marks a shift in the industry stage. After the price war fails, the war won't end; it will just move to a new battlefield.

In a sense, the emergence of the price - increase wave is also an attempt by the industry to get out of this quagmire.

When the profit margin returns to a reasonable range, automobile companies will have the energy to compete decently, using product strength rather than negative public relations.

IV. An old script

If we look at the automobile industry in isolation, it's easy to make a misjudgment. But when we put it into the Chinese business history of the past decade or more, this process is extremely familiar.

In 2014, Didi and Kuaidi launched a subsidy war that went down in history. Both sides burned more than billions of yuan, and passengers could take a taxi for just a few yuan. They merged in 2015, and the subsidies stopped suddenly. In the following years, the price of ride - hailing services has been rising, and the dynamic surcharge during peak hours is even more expensive than that of taxis.

In 2016, the situation with shared bicycles was even more extreme. Ofo and Mobike offered free rides and one - yuan monthly subscriptions, and capital poured in crazily. The result was that Ofo went bankrupt and Mobike was sold to Meituan. Today, the price of a bike ride has risen from a few cents to 1.5 to 2.5 yuan for half an hour, about a seven - fold increase in ten years.

In 2025, the food - delivery industry had another round. JD entered the market aggressively, and the three - party platforms launched a subsidy war worth billions of yuan. After half a year, the regulators had consecutive talks with them. By September, the billion - yuan subsidy entrance on the app's home page quietly disappeared.

The path is almost the same every time:

Subsidy - driven user acquisition → Extreme involution and collective losses → Elimination of small and medium - sized players → Price return.

The only difference lies in the way to trigger the price adjustment. For ride - hailing services, the price increased after the merger; for shared bicycles, it increased after the reshuffle; for food delivery, it increased after the regulatory intervention.

The key point here is that price increases are never about greed; they are a self - rescue attempt by the industry.

The new energy vehicle industry has been stuck in the second stage for the past three years. Now, it has finally started to move forward.

V. This time it's more brutal

However, there is a fundamental difference between the automobile industry and the Internet industry. The automobile industry has no room for error.

Internet companies can operate at a loss for a long time, rely on capital infusion, and use other businesses to support themselves. But the automobile industry can't. It is an extremely heavy industry with a complex supply chain, high manufacturing costs, long R & D cycles, and huge capital occupation.

You can let an app operate at a loss for three years, but it's difficult to keep a production line running at a loss for a long time.

This is why in the past few years, the more an automobile company adopted an Internet - like approach, the closer it got to the risks of the manufacturing industry. The intensity of the price war followed the Internet logic, but it was the physical manufacturing industry that had to bear the consequences.

Automobile companies are obviously looking for a way out. In this round of price increases, most brands have chosen to increase the configuration while raising the price. Avatr 12 has added Huawei's high - level intelligent driving kit, and Xiaomi SU7 has added a lidar.

In essence, it's telling consumers that the extra money you spend will get you more.

There are deeper changes at the supply - chain level.

Li Bin, the founder of NIO, recently proposed standardizing the specifications of battery cells and normalizing the types of chips. Batteries and chips together account for more than 50% of the total vehicle cost. If the entire industry can reach a certain level of unity in key components, the cost - reduction space brought about by economies of scale could exceed tens of billions of yuan.

He Xiaopeng, the chairman of XPeng, was more direct. He publicly stated some time ago that XPeng won't touch cars priced below 100,000 yuan, as making cheap, low - profit cars has no value. In the second quarter of last year, 17 automobile companies jointly stated that they would pursue high - quality development. He Xiaopeng believes that the possibility of another round of disorderly involution is almost zero.

One is talking about how to save, and the other is talking about what not to do. Although the directions are different, the judgment is the same: The stage of seizing market share at a loss is over.

This means that the competition logic is changing. In the past two years, the competition was about who dared to lose more. In the future, it will be about who can save more. Who can integrate the supply chain more deeply, who can do a better job in platformization, and who can produce better cars with less money.

VI. The global undercurrent that can't be ignored

If we only look at the Chinese market, we'll underestimate the depth of this issue.

In September 2024, the United States officially raised the import tariff on Chinese electric vehicles from 27.5% to 100%, almost quadrupling it. Coupled with the previous reciprocal tariffs, the comprehensive tax rate for Chinese electric vehicles entering the US market has exceeded 100%.

At the same time, the Inflation Reduction Act (IRA) has set strict domestic supply - chain thresholds for electric - vehicle subsidies. Key battery minerals and components must be manufactured or processed in North America to a certain proportion, otherwise, consumers cannot enjoy the maximum subsidy of $7,500.

This is equivalent to building a wall with tariffs and digging a moat with subsidies to keep Chinese electric vehicles out of the US market.

The situation in Europe is more complicated. Since July 2024, the EU has imposed a temporary anti - subsidy tariff of 17.4% to 37.6% on Chinese - made electric vehicles, which has later become a formal tariff, reaching a maximum of 45.3%. Although in early 2026, China and the EU reached a framework agreement on a "price commitment" mechanism, trying to replace high tariffs with a minimum price, the negotiation is still in a stalemate, and the implementation effect is still unclear.

For Chinese automobile companies, the uncertainty in the European market has increased significantly.

In the past few years, Chinese new energy vehicles have had an invisible bonus: the world's most complete supply chain, extreme cost advantages, and a rapidly expanding export volume. But now, this bonus is being gradually dismantled. The US has blocked the market entrance, Europe has raised the entry threshold, and although the markets in Southeast Asia and the Middle East are growing, their scale is far from being able to replace that of Europe and the US.

When the external market becomes more complex, companies must restore their profits internally. Thus, a closed - loop is formed. When external