"Unfortunately, that competition comes with a price - or rather, with a price war. As the New York Times reports, rabid competition among about 50 of the country's top EV automakers has led to repeated price-slashing in a manic hunt for new buyers. As those manufacturers race to the bottom, it's causing an immense financial squeeze: many have started having trouble paying their suppliers to meet demand, instead imploring state-run banks to help them build more factories."
"In other words, it's a startling reversal of expectations: in China, the world's largest communist country, an unfettered free market is driving down prices so far that it's threatening the auto sector; in the United States, which has long championed the capitalism, the auto industry is run entirely by established players, and required a massive bailout in late 2008 to keep it and the economy afloat."
"Authorities in China, which does money and manufacturing very differently, are clearly hoping to avoid a similarly expensive and embarrassing crisis. The Chinese government has begun campaigning against what is, as the NYT reported in a July story about the issue, widely known there as "involution": a cycle of excessive competition leading to unsustainable deflation, or lowered prices."
China's electric-vehicle market has expanded rapidly with cheaper cars and many non-Tesla options, fueling intense competition among roughly 50 top automakers. That competition has produced repeated price cuts and a relentless price war, creating severe financial strain on manufacturers. Many automakers struggle to pay suppliers and have asked state-run banks for support to build factories. The Chinese government is campaigning against "involution," aiming to curb destructive competition and deflation. Seventeen automakers pledged faster supplier payments, including BYD, but a recent compliance report shows the pledge has not been fully met and enforcement remains weak.
Read at Futurism
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