China’s EV sector doubles down on discounts and cheap financing as growth cools
Carmakers are shifting from straight price cuts to subsidised loans and feature-packed models, as China’s EV price war drags on
Electric vehicle makers have kicked off a fresh round of price cuts in mainland China at the start of 2026, despite Beijing’s repeated calls to curb “involution”, as pressure on margins and survival prospects persists.
German luxury carmaker BMW has cut the mainland China price of its all-electric i7 M70L to below 1.6 million yuan (US$225,000) – a reduction of more than 300,000 yuan, or 16 per cent – and lowered prices on other EVs and petrol-powered models by at least 10 per cent, according to its official website.
Chinese smartphone and EV maker Xiaomi, meanwhile, has rolled out a two-month promotion for its first sport utility vehicle, the YU7, offering three years of zero-interest financing.
Founder and chairman Lei Jun said more than 150,000 YU7s had been delivered since the model debuted in late June last year.
These moves were in line with expectations, said Zhang Yichao, an electric-vehicle analyst and partner at consultancy AlixPartners. “The price war will probably last one to two years as penetration has slowed,” he said.
New energy vehicles accounted for 59.3 per cent of total passenger car retail sales in November 2025, China Passenger Car Association (CPCA) data showed, up 8.4 percentage points from a year earlier. But the pace of increase was slower than the 9.3 percentage-point rise recorded in 2023.
