China's automotive industry is currently witnessing an intense price war, primarily driven by heavyweights Tesla and BYD. In a bid to stimulate sales, BYD has aggressively reduced prices on over 20 models, including the Seagull EV, now marked at 55,800 yuan ($7,780). Tesla has followed suit by slashing up to 70,000 yuan ($9,600) off its Model S and Model X, intensifying competition and placing increased pressure on premium automakers, the South China Morning Post reported.

The aggressive discounting strategies have triggered concerns over the industry's financial health and led to notable market repercussions. According to reports, Chinese EV stocks have suffered substantial declines, with BYD's shares falling nearly 9% and competitors like Geely, Li Auto, and Xpeng recording losses of 7%, 5%, and 4%, respectively. This situation has also stirred tensions between major players, notably BYD and Great Wall Motor, highlighting the industry's strained dynamics.

In response to these developments, the Chinese government has stepped in, urging an end to the cut-throat pricing to protect the sector's stability. Reuters noted that the Ministry of Industry and Information Technology plans to work with law enforcement to address unfair competition practices, aiming for a more sustainable and stable automotive market environment. These actions reflect the broader challenges and regulatory scrutiny faced by the industry amidst the ongoing price wars.