Auto-First | Wutong

Every September TEDA Forum is a window to observe the trend of China's auto industry. This year, the trend has clearly changed.

In the past few years, the keywords of this forum have always been "New Energy Penetration Rate", "Smart Driving Equity", "Going Global". But this year, you will find a subtle change — from the Chief Engineer of the Ministry of Industry and Information Technology, the Secretary-General of the Industry Association to executives of top car companies, everyone is saying the same thing: curb irrational competition, and can no longer get trapped in unscrupulous price wars.

This is not just empty talk. When industry profit margins fall below the alert line, when overcapacity becomes a consensus, when "losing money on every car sold" changes from rumor to reality, stopping irrational competition is essentially declaring the end of an era of extensive growth.

The question is: No longer relying solely on low prices to exchange for volume, how to fight the next battle?

What Happened at the Forum: Signals of Collective Shift from Ministries to Car Companies

First, let's clarify the most critical pieces of information from the forum.

Wang Weiming, Chief Engineer of the Ministry of Industry and Information Technology stated at the opening ceremony on September 19, which can be regarded as the policy orientation of this industrial shift. He openly stated that the current industry faces challenges such as "irrational competition, declining manufacturing profit margins", and announced that it will implement a special action to improve automotive standards and implement a digital ID system for power batteries.

The weight of this sentence lies in: previously the regulatory layer was more focused on industry guidance, now upgraded to normalized regulation of competition order, rectifying irrational competition chaos. A difference of one word conveys a stronger industrial governance orientation.

He Yi, Executive Deputy Secretary-General of China Association of Automobile Manufacturers stated that the domestic market is facing phased pressure, the whole industry should consolidate consensus and respond collaboratively, jointly maintain a fair market environment, and continuously improve global compliance management capabilities and risk resistance capabilities.

Meanwhile, Wang Weiming pointed out industry shortcomings — high-end chips, basic operating systems still have gaps, overseas trade barriers are intensifying, and competition has shifted from product level to rule level. The breakthrough direction is also clear: automotive chips, all-solid-state batteries, operating systems, autonomous driving large models.

Gong Jinfeng, Deputy Secretary of the Party Committee and General Manager of China Automotive Technology and Research Center's statement is more direct: the industry must shift from price competition to quality upgrade, implement product safety main responsibility, and strictly control production consistency. At the same time, support L3 and above autonomous driving scale commercial operation, promote deep integration of automobiles with AI, low-altitude economy, and embodied intelligence.

Statements at the enterprise level are also noteworthy. Liu Zongcheng, President of Seres Group Technology Company said something very heavy: "The biggest risk in the automotive industry is not slowness, but speed of achievement." He opposes compressing verification cycles and lowering safety standards to rush speed, emphasizes that Chinese automobiles must move from scale leadership to quality leadership, and adhere to the "Five Highs" standard of high safety, high reliability, high performance, high quality, and high value.

Chen Xiaofeng, Vice President and Chief Scientist of Great Wall Motor Technology Center then directed the topic towards going global: Intelligence is the most distinct label for Chinese cars going global. Going global has already bid farewell to simple cost-performance ratio, it must upgrade from hardware export to systematic AI ecosystem going global. Overseas competition is not selling cars, it is the cross-regional landing of a whole set of intelligent capabilities.

Looking at these speeches together, you will find a clear main line: the benchmark for industry competition is shifting from "low price high volume" to "quality + system + rules".

Fact Layering: What is Confirmed, What is Still Changing

Before discussing the industry shift, let's clarify the boundaries of facts first.

Confirmed Facts:

First, the "15th Five-Year Plan for the Development of Intelligent Connected New Energy Vehicle Industry" issued by nine departments was implemented on September 11, explicitly clarifying the goals of 70% penetration rate for new energy passenger cars and 40% for commercial vehicles by 2030, with large-scale implementation of highly autonomous driving. This is not an impromptu speech at the forum, but a formal policy document.

Second, the collective statements of top car companies are consistent — opposing irrational competition, emphasizing quality and safety. Executives from companies like Seres, Great Wall, and Changan conveyed similar signals on different occasions.

Third, the direction of capacity control and merger and restructuring is clear. The 15th Five-Year Plan document mentions strengthening capacity early warning control and encouraging merger and restructuring. This means that clearing backward capacity will no longer rely solely on spontaneous market adjustment, but will also be supported by policy guidance.

Variables Still Need Observation:

First, how is "rectifying irrational competition" specifically implemented? Is it interviews, industry self-discipline, or other regulatory measures? The execution intensity directly affects the pace of industry shift.

Second, the coverage and implementation time of the power battery digital ID system. Currently only the direction of system construction is clear, and specific details have not been released to the public.

Third, FAW's intention to invest in GAC. Both parties have only signed an intent agreement, and are in the planning stage of major asset restructuring, still with major uncertainty. If this cooperation is implemented, it is a new paradigm of central enterprise restructuring after the shelving of Changan Dongfeng integration: capital union first, then business synergy, not pursuing full merger. Whether it can be implemented in the future also depends on the compilation of the plan and regulatory approval results.

Distinguish these clearly, and you will not misread "direction set" as "reform implemented".

 The Real Disagreement Behind This Shift: If Not Low Price War, Then What?

On the surface, all parties at the forum are calling for curbing irrational competition. But looking deeper, the understanding of "what war to fight next" by all parties is actually not fully consistent.

The perspective of the Ministry of Industry and Information Technology is a struggle for rules. Wang Weiming mentioned that global industry competition has become a struggle for standards and rules. China's new energy vehicle production and sales have been first in the world for 11 consecutive years, but high-end chips and basic operating systems still have shortcomings. So the breakthrough direction is automotive chips, all-solid-state batteries, operating systems, autonomous driving large models — these are "bottleneck" areas, and also where the discourse power for the next round of rule-making lies.

Seres' perspective is a struggle for safety and quality. Liu Zongcheng said "the biggest risk is speed of achievement", behind which is industry concerns: in the process of rapid expansion, some enterprises have the impulse to compress verification cycles and lower safety standards. The "Five Highs" standard he emphasizes is essentially saying: scale growth cannot be at the expense of safety.

Great Wall's perspective is a struggle for ecosystem going global. What Chen Xiaofeng said about "systematic AI ecosystem going global" does not mean simply selling cars overseas, but moving a whole set of capabilities such as intelligent driving, cockpit systems, charging networks, and user services overseas. This is a higher dimension competition — from selling products to selling systems.

You will find that these three perspectives are not contradictory, but focus differently. The regulatory layer worries about industrial security and rule discourse power, car companies need to solve business models and find differentiated competitive paths, while the industry forms a unique consensus: relying solely on low prices for volume is no longer viable.

Why Now: The Industry Turning Point Has Arrived

Why specifically the 2026 TEDA Forum collectively calling to curb irrational competition? This is not accidental, but a combination of several variables reaching a critical point.

First Variable: The domestic market has shifted from incremental to stock-based.

New energy penetration rate stabilizes at 60%, fuel vehicles accelerate decline. When penetration exceeds 50%, the industry changes from "grabbing new users" to "grabbing stock replacement users". In this stage, the marginal effect of low-price competition will decrease rapidly — the number of users that can be grabbed by lowering prices becomes less, but the profit loss becomes larger.

Second Variable: Overcapacity has changed from a hidden worry to reality.

The 15th Five-Year Plan specifically mentions capacity early warning control, indicating that this problem has become serious enough to require policy intervention. A large number of car companies are in a loss-making state, market share continues to concentrate on top companies like BYD, Geely, Chery, Leapmotor; losing money on selling cars becomes normal, dealer profits continue to bear pressure. This state continuing long-term will be transmitted to the entire industry chain.

Third Variable: Overseas profit has become a new lifeline.

Domestic single-car profit is extremely thin, overseas single-car net profit is significantly higher than domestic. BYD's overseas revenue share exceeded half for the first time in the first half of the year, indicating that going global has changed from "icing on the cake" to an important profit pillar. However, direct export of complete vehicles faces tariff barriers in various countries, car companies fully turn to overseas factory building + local supply chain model — competition dimension upgrades, no longer a cost-performance battle of single cars, but a comprehensive competition of supply chain, system, and compliance.

Fourth Variable: Global traditional car companies collectively shrink and slim down.

Volkswagen continues to promote local capacity optimization, layoff plans, shrink fuel vehicle business, streamline product lines; BMW and Mercedes-Benz simultaneously compress R&D and personnel, shrink inefficient businesses. Traditional car company strategy: cut fuel vehicle R&D, reduce redundant capacity, focus on high-end electric vehicles.

This leaves a window period for Chinese car companies, but the window will not remain open forever. Whoever can build system capabilities within the window period can occupy a position in the future global landscape.

These four variables combined explain why it is now — not because enterprises actively give up low-price strategies, but the cost of continuous irrational competition has become so large that the entire industry finds it difficult to bear.

What to Watch Next: Three Observation Dimensions

The forum ended on September 20, but the industry shift has just begun. Next, there are three dimensions worth continuous observation.

Observation 1: Will the power battery digital ID become a straitjacket for irrational competition?

The core of the battery digital ID system is to achieve traceability and regulatory oversight of the full lifecycle of power batteries. This means the grey space of low-price competition will be compressed — the path of relying on low-cost inferior batteries to lower prices will be subject to stronger constraints in the future. The implementation details and enforcement intensity of this system directly determine whether "quality upgrade" is a slogan or reality.

Observation 2: Will central SOE capital join hands, triggering a new round of industry integration?

FAW intends to invest in GAC, belonging to the planning stage, and still has major uncertainty. If this model runs smoothly, more car companies may collaborate in procurement, R&D, and going global through equity binding methods in the future. This will directly change the industry competition landscape.

Observation 3: Localization going global, is it real profit or a new burden?

BYD Hungary Factory, Leapmotor with Stellantis Spain Shared Line, Chery Vietnam Factory, Changan Indonesia Base — the overseas factory building wave has risen. But building a factory is just the first step. Whether able to achieve local profitability overseas, build a complete supply chain system, and cope with local compliance and labor issues are the real tests.

Auto-First View: Industry Track Switch, New Stage of Hard Power Competition Begins

Every year after the TEDA Forum ends, a bunch of "golden quotes" are spread. But golden quotes themselves do not change the industry. What truly changes the industry is the realistic pressure and policy push behind the golden quotes.

This year's signal is clear: China's automobile industry is bidding farewell to the extensive stage of "exchanging price for volume", and entering a new stage of "winning by quality, going global by system, deciding victory by rules".

This process will not be smooth. Irrational competition will not disappear immediately because of appeals on the forum, quality upgrade will not be completed automatically because of a few documents. But the direction is set —   the next five years, whoever can build barriers in core technology, system capabilities, and global compliance will truly survive.

For ordinary consumers, this may mean: ultra-low price models will become fewer, but models with better product quality and safety guarantees will become more and more. For car enterprises, this means: the days of relying solely on price cuts to boost volume are over, the era of competing on comprehensive strength has begun. (Some images from the internet)