Changan, Xiaomi, and Zeekr are rolling out intensive adjustments, as automakers collectively "drop the disguise"

Recently, the automobile market has a bit of a feeling of "one like winter, one like summer".

On one hand, Changan Automobile officially announced the integration of its two major brands, Avita and Deepal, in an attempt to solve the dilemmas of brand internal strife, repeated R & D, and continuous losses. On the other hand, car companies such as Tesla, Xiaomi, and Zeekr have intensively "raised" prices and reduced terminal discounts, and the trend of the "price war" seems to have been reversed.

These two seemingly contradictory actions actually share a similar underlying logic. When the price war has plunged the industry into a vicious cycle of "the more you sell, the more you lose", car companies need to find a way to break the deadlock. In fact, whether it is to reduce costs and increase efficiency through integration or to raise prices to relieve cost pressure, in essence, car companies are trying to hold the bottom line of profitability under the multiple pressures of hitting the bottom of profits and rising costs.

Data from the China Passenger Car Association shows that the penetration rate of new energy vehicles has now exceeded 60%, and the sales growth rate has slowed down. In the past, car companies could exchange price for volume to grab market share. Now, the marginal effect of this strategy is gradually weakening. A new contest focusing on profitability quality and technological efficiency has just begun.

Changan Does "Subtraction"

The integration of Avita and Deepal by Changan Automobile is essentially a self - rescue forced by the market.

As a traditional automaker, Changan Automobile's sales have fallen behind BYD and Geely. In May, BYD's sales exceeded 383,000 vehicles, and the total sales of Geely's new energy brands reached 133,000 vehicles. In contrast, Deepal sold 33,000 vehicles that month, and Avita only sold a little over 7,300 vehicles. The monthly sales of Deepal + Avita are less than one - eighth of BYD's and one - third of Geely's new energy sales.

A greater challenge than falling behind in sales lies in the loss of brand perception. After launching the plug - in hybrid models Zeekr 9X and 8X, Zeekr has gradually stabilized its position in the high - end new energy vehicle track. In contrast, Avita, which holds three aces: Changan, Huawei, and CATL, has always underperformed the market expectations. In the first quarter, Avita's cumulative sales were 11,400 vehicles, almost halving year - on - year.

Different from Avita's high - end positioning, Deepal focuses on cost - effectiveness and has achieved a good sales scale by targeting the mainstream price range of 100,000 - 200,000 yuan. However, due to the price war, it is still in a state of loss. Changan Automobile's 2025 financial report shows that in that year, Deepal lost nearly 900 million yuan.

That is to say, although Avita has a high price, it has failed to break through the sales bottleneck and cannot spread the high R & D and operating costs. While Deepal has the scale effect, its profit per vehicle is low. The two brands fight independently. One has volume but no profit, and the other has profit but no volume. It is difficult for them to stand firm in the face - to - face competition with BYD and Geely. Therefore, integration has become the most practical choice.

Previously, Geely also faced a similar situation. After implementing the "One Geely" strategy and integrating Zeekr and Lynk & Co into the Zeekr Group, its market performance significantly recovered. And Changan's integration plan this time does not follow the brand merger route but adopts the model of "independent front - end, collaborative middle - and back - end".

Specifically, the brand positioning, product design, channel services, and user operations of Avita and Deepal are independent of each other. Avita continues to target the high - end luxury market, and Deepal still focuses on the mainstream affordable market to avoid internal strife.

In the middle - and back - end links that consumers cannot see, the two brands will share R & D platforms, supply - chain procurement, manufacturing systems, and technological resources. Avita's advanced technologies such as high - level intelligent driving and distributed electric drive can be applied to Deepal models. At the same time, Deepal's large - scale production capacity and procurement volume can also support Avita and reduce costs.

For Changan, the direct effect of integration is to relieve the profit pressure. The financial report shows that in the first quarter of this year, Changan Automobile's revenue was 32.7 billion yuan, and the net profit attributable to the parent company was only 351 million yuan. The net sales profit rate was as low as 0.67%, which means that for every 100 yuan of cars sold, it can only earn less than 70 cents.

According to Changan's calculation, after integration, costs can be reduced by 20% - 30%. As industry competition enters a deeper stage, "cost reduction" can serve as a buffer against the price increase of upstream costs and help car companies hold the bottom line of profits. When the industry growth rate slows down, controlling costs and surviving is obviously more important than blindly expanding the scale and grabbing market share.

Dare to Actively "Raise Prices"?

While Changan is doing "subtraction" for Deepal and Avita, brands such as Tesla, Xiaomi, and Zeekr have quietly started to "raise prices". Recently, the topic of "price increase" has once become a hot topic on social platforms. In fact, the price increase is not simply and rudely raising the guiding price but is caused by factors such as the reduction of financial interest subsidies, the rights and interests of optional packages, and vehicle model upgrades.

In January this year, Tesla took the lead in launching a seven - year interest - free loan, which drove many "new forces" to follow. However, this ultra - long - term interest - subsidy preferential policy was stopped due to policy reasons. Since May, car companies such as Tesla, Xiaomi, and Li Auto have adjusted their policies, and the longest car - loan term has returned to five years. Although the official guiding price has not changed, the reduction of interest subsidies has led to higher monthly car - loan payments and shorter interest - free periods, making users feel that the price has "increased".

Zeekr has significantly increased the average price per vehicle by more than 50% due to brand upgrading, and the feeling of "price increase" is obvious. Data disclosed by Zeekr shows that in May, the combined sales of Zeekr 9X and 8X models accounted for nearly 50%, among which the average selling price of the 9X reached 530,000 yuan. Previously, Zeekr's sales were mainly from models such as 001 and 7X, with a selling price in the range of 200,000 yuan.

However, "price increase" is not a common phenomenon in the industry. More often, users are paying for high - end consumption. At a BYD store in Wenzhou, the salesperson said that the price of ordinary models has not increased, while the models equipped with the "Heavenly Eye" intelligent driving system have increased in price by about 2,100 yuan compared with before. Compared with the ordinary version, the models with lidar are "smarter" and can support urban traffic - light scenarios, providing a better urban intelligent driving experience.

Judging from consumers' feedback, they are not impulsively placing orders due to price changes. "Bao Bian" randomly surveyed several users, and they don't care about car companies tightening discounts. They generally believe that price reduction is still the trend, and electric vehicles are upgraded quickly. They will not rush to change cars for a small amount of discounts.

On the contrary, new models with firmer prices and richer configurations attract more customers to the store. At the Zeekr and NIO stores in Wenzhou Mixc, "Bao Bian" saw that even on weekdays, there were still users entering the stores for consultation. In contrast, some brands and models with poor sales, although offering large discounts, have fewer customers entering the stores. On Chezhan Avenue in the urban area of Wenzhou, there are many 4S stores of various car brands. Some "second - tier" brands offer discounts ranging from several thousand to tens of thousands of yuan. For example, the plug - in hybrid version of Volvo XC60 has a direct price cut of 240,000 yuan compared with the official guiding price, almost halving the price, but the store is even more deserted.

A sales manager of a "new force" brand told "Bao Bian" that if a car company wants to digest inventory cars or use national subsidies to promote sales, the discount rate is generally relatively large. For new models or high - end versions, due to the support of high - computing - power platforms, ultra - fast charging, and intelligent chassis, there may even be a price premium.

For example, the starting price of the new - generation Xiaomi SU7 is 219,900 yuan, a price increase of 4,000 yuan compared with the previous generation. When the standard version is sufficient, Xiaomi puts functions such as head - up display and power - operated doors into the optional package, with a quotation of 6,500 yuan. At this time, users may not complain about the price increase but instead feel that they are paying for higher - level configurations.

The direct reason for the price increase of luxury configurations lies in the price increase of lidar, intelligent driving chips, etc. According to a report in "Daily Economic News", Lei Jun, the founder of Xiaomi, said in a live - broadcast that the price of memory is increasing quarterly. It increased by 40% - 50% last quarter, and the memory cost of cars alone will increase by several thousand yuan this year.

This has also led to the co - existence of price cuts and price increases in the automobile market. Ordinary models are discounted due to homogenization and poor sales, but high - end models depend more on consumers' preferences. If users want to experience better intelligent driving, handling, and acceleration performance, they are still willing to pay even if the price increases due to the rising costs of chips, lidar, and memory.

The Bottom Line Is to Make Money

The "one cut and one increase" in prices seems contradictory, but it is a signal that the industry is shifting from incremental expansion to stock profit competition. The root cause behind this lies in the continuous decline of car companies' profitability, and the profit margin is approaching the safety red line.

Data from the China Passenger Car Association shows that from January to April this year, the overall profit rate of domestic car companies was only 3.4%, far lower than the average level of 6% in industrial enterprises above the designated size. The industry's profit decreased by 17% year - on - year. During the same period, the national automobile sales volume was 9.574 million vehicles, a year - on - year decrease of 4.8%. The decline in profit is much higher than the decline in sales volume.

Specifically for leading car companies, the financial reports show that in the first quarter of this year, the profits of Changan Automobile, Great Wall Motor, and BYD were 351 million yuan, 945 million yuan, and 4.085 billion yuan respectively, with year - on - year decreases of 74.09%, 46.01%, and 55.38% respectively. The "new forces" are under even greater pressure. Li Auto and XPeng have turned from profit to loss, with net losses of 2.3 billion yuan and 1.78 billion yuan respectively. Against the background of rising upstream costs and operating costs, restoring profitability has become an urgent need for the entire industry.

In addition, when car companies successively announce their entry into the fields of embodied intelligence and chips, the huge R & D expenses are also forcing car companies to return to the logic of prioritizing profitability.

In 2025, XPeng Motors' R & D investment reached 9.49 billion yuan, of which 4.5 billion yuan was related to AI. It is expected that the R & D investment related to AI will further climb to 7 billion yuan. Li Auto's investment in embodied intelligence has increased rather than decreased. In 2026, its investment in AI reached 12 billion yuan. Li Xiang, the CEO of Li Auto, clearly stated that autonomous driving is the first half of embodied intelligence, and general - purpose humanoid robots are the second half. A humanoid robot product has been launched, and the self - developed Maher 100 chip is expected to be mass - produced in the second quarter of this year.

In fact, self - developed chips, model training, and mass - producing humanoid robots are all long - cycle and capital - intensive businesses that require a large amount of capital support. Stabilizing the profit from vehicle sales can provide blood for cutting - edge businesses, which is forcing car companies to turn profitability from an option into a must - answer question.

When the penetration rate of new energy vehicles exceeds 60% and the market growth reaches its peak, "mediocre" low prices may not necessarily attract buyers. The past approach of "losing money to gain popularity" is no longer sustainable. The core task of the industry has shifted from accelerating popularization by exchanging price for volume to an all - round competition in intelligent experience, safety capabilities, and service systems.

This article is from the WeChat official account "Bao Bian" (ID: baobiannews). Author: Chen Fashan, Editor: Liu Yang. Republished by 36Kr with permission.