Over the past two months, an unusual signal has emerged from the Chinese automotive market. Nearly 20 models have announced price increases in a concentrated manner.
Two years ago, such a scenario would have been unimaginable. At that time, the competition was all about who could cut prices more aggressively, pushing them to the absolute bottom. However, the price war ultimately revealed a sobering truth through the numbers: in 2025, China's vehicle sales exceeded 34.4 million units, yet the industry's profit margin stood at only 4.1%. By the first two months of 2026, it had further declined to 2.9%. Scale was growing, but profits were shrinking.
Wang Hui, Chairman of Avatr Technology, used a blunt statement at the Future Automotive Pioneers Conference on May 29th: "Sales volume without profit is pseudo-sales volume, and scale achieved through price wars is a false prosperity."
The price hikes themselves are not the main point. The critical issue revealed behind them is this: as Chinese new energy vehicles have caught up with or even surpassed competitors in product capability, the question of "what exactly defines a Chinese car" has suddenly become unavoidable.
When merely following others, this question did not need an answer. Followers only required efficiency, not an identity. But Chinese automakers are now running ahead, where there are no reference points. At this conference, figures from Geely to Avatr to NIO were all attempting to answer the same question on stage.
**Anchor Point** During the Beijing Auto Show, an image circulated online: it lined up new models from Chinese brands against European brands, comparing which resembled which. This image struck the most sensitive nerve in the Chinese automotive industry. While product capabilities have been matched, even leading in areas like intelligence and the three-electric systems, in terms of aesthetics and sense of identity, Chinese brands still live within others' frames of reference.
William Li, Founder of NIO, provided an accurate definition for this situation at the same conference: brands are transitioning from a "chaotic period" into a "clarification period." His judgment is based on the logic that product homogenization is becoming increasingly severe. An 800V platform, end-to-end intelligent driving, and AI large model-powered cockpits have almost become standard. User car selection is shifting from choosing specifications to choosing a brand. The latest research from McKinsey confirms this: the ranking of brand influence in car purchase decisions, which was fifth one or two years ago, has now risen to second.
Avatr's Wang Hui pinpointed a deeper layer of anxiety with one sentence: "True luxury is not about who you resemble, but who you are." His strategy is not just talk. Avatr has established design centers in both Munich and Shanghai, hiring over 200 designers from 25 countries, elevating design to an "absolute strategic-level priority." Chongqing Changan Automobile Company Limited has slashed its five-year product plan from 63 models to 36, concentrating resources on developing premium products.
Wang Hui admitted frankly: "Price [increases] can only sustain [interest] for two months. After two months, there's not much effect, and there's also a bunch of existing owners feeling let down. After the last price increases for the Avatr 12 and 06T, I could finally sleep soundly."
Overseas markets have validated that this path works. The Avatr 11 starts at 290,000 RMB domestically but approaches 450,000 RMB overseas. It has consistently ranked first among luxury electric SUVs in Thailand and became profitable within a year and a half of its overseas launch. Wang Hui revealed the resource allocation ratio during a panel discussion: a 50-50 split between domestic and overseas markets, but perhaps 80% of resources need to be allocated to gain the recognition of that 50% of overseas customers. Brand premium is not a slogan; it has a tangible price tag.
It's not only Chinese brands redefining themselves. Dr. Hans Georg Engel, Head of R&D and Procurement in China for Mercedes-Benz, offered an answer that steps outside the new energy vehicle framework: "Intelligence for All Powertrains." Mercedes-Benz will become the first automaker to equip cutting-edge intelligence across all powertrain forms. This essentially sidesteps the industry narrative that "intelligence equals pure electric," redrawing the lines in its own way. The new generation pure-electric GLC features a virtual assistant "Xiaoben," developed in cooperation with the Doubao large model. The rear-seat entertainment system in the new S-Class is the first to run a multi-modal large model on the device side. Both projects were led by Chinese R&D.
The "non-following" chosen by this 140-year-old German brand is not a retreat to European experience but integrating Chinese capabilities into its own system. When asked about his view on new Chinese luxury brands, Dr. Engel said, "I have great respect for them," then pivoted: Mercedes-Benz is committed to continuous leadership. Respecting competitors, but not intending to yield.
Being oneself is not just about choosing a path; it also requires the courage to abandon others. Li Chuanhai, Vice President of Geely Auto Group, placed his bets on safety and chassis. Geely spent 20 years absorbing safety technology from Volvo and handling expertise from Lotus, now exporting based on its own standards. The average transaction price of the Zeekr 9X exceeds 530,000 RMB, making it the sales champion in the over-500,000 RMB luxury SUV segment for several consecutive months.
William Li was more direct: "We simply won't develop cars that are clearly unprofitable." He invests money in foundational R&D and battery swap stations. Over 11 years, NIO's cumulative R&D investment reached 68.8 billion RMB, with over 20 billion RMB invested in charging and swapping infrastructure. The company plans to build another 1,000 swap stations this year. NIO's brand average transaction price is 390,000 RMB, 50,000 RMB higher than BMW's and 130,000 RMB higher than Audi's.
What the industry is collectively rejecting is the approach of casting a wide net to survive a price war.
The dimension of competition has already changed. This is what is happening.
**The Battleground** The focus of value competition will ultimately land on very specific battlefields.
The penetration rate of pure electric vehicles has already surpassed 41% and is accelerating. A figure from Zhang Zhengping, Chairman of Seres, is even more telling: during the May Day holiday, AITO users' mileage using intelligent driving assistance accounted for 46.9%. For nearly half of the driving time, humans were no longer controlling the steering wheel. The implication behind this number is larger than autonomous driving itself.
Once people are liberated from driving, the vehicle interior becomes a block of allocatable time. The one to two hours of daily commute that originally belonged to the steering wheel—who does it belong to now?
Li Chuanhai put it bluntly: "Whoever achieves this first will master the ability to define the ecosystem." In his description, the future cockpit has no fixed interface, no individual app icons; an AI agent takes over all interactions. Geely's "Super Eva" project follows this logic: conversational services, integrated with external ecosystem partners, enabling consumption within the vehicle. As he said on the panel, "Whoever occupies this entrance will occupy all of the user's time within the vehicle."
Understanding this judgment clarifies why "value competition" is not an empty phrase. Whoever controls the in-vehicle entrance can turn users' commute time into a commercial scenario. This is far more important than the profit from selling a single vehicle.
But the battle for the entrance is only one side. Value competition has another battlefield: overseas. Avatr's fact of profitability within a year and a half overseas, with an average price of 450,000 RMB, has already proven that brand premium can travel abroad. But the deeper question is who defines the rules.
Li Chuanhai discussed not selling cars, but setting standards. Geely is the first Asian automaker to hold a director's voting right in the International Automotive Task Force (IATF). By March this year, it had led or participated in the formulation and revision of 1,125 standards and independently released 593.
Selling cars is business. Setting standards is another matter entirely.
At the end of his speech, Li Chuanhai described the current state of China's automotive industry as "uncharted territory." There are no reference points ahead. For the past few decades, Chinese automakers could run by looking at the backs of those ahead. Now that they are running ahead, they must set the direction themselves.
The wave of price hikes is merely a surface phenomenon. What has truly changed is that Chinese automakers are now compelled to start answering questions that followers never had to face.
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