Price war in the electric vehicle sector hurts Chinese steelmakers

Competition among automakers puts pressure on raw material suppliers

The China Iron and Steel Association (CISA) has warned that the price war in the electric car sector is hurting steelmakers and deepening their financial problems. This was reported by Bloomberg.

Some automakers are asking steelmakers to reduce prices for steel sheets by more than 10% since last year, and there are cases of delayed payments to steel mills for months.

“Automobile companies are competing fiercely in terms of prices, putting considerable pressure on raw material suppliers. This has seriously affected the stable operation of the plants,” CISA said in a statement.

The price war in China’s electric vehicle industry is a new challenge for the country’s steelmakers, who are already facing a long-term real estate crisis and, more recently, a slowdown in economic growth due to trade wars.

CISA.has called for cooperation with the automotive industry to achieve a fairer functioning of the market.

On June 10, three Chinese automakers, including Dongfeng Motor Group, Guangzhou Automobile Group, and China FAW Group, issued statements committing to standardize invoice payment periods for their suppliers to 60 days. Recently, Chinese authorities have expressed concerns about supply chain financing.

In May, some companies reduced prices for new energy vehicles, which was a new round of price war and provoked concerns in the industry, Steel Orbis writes. The China Association of Automobile Manufacturers (CAAM) called on relevant enterprises to reach consensus, strengthen self-discipline and overcome involution or excessive competition, and maintain a fair and orderly market situation.

In 2023 and 2024, China’s car production reached record highs, exceeding 30 million units, and is expected to grow this year. However, according to the National Bureau of Statistics, the profitability of the country’s auto sector decreased from 7.3% in 2018 to 4.3% in 2024, and in the first quarter of 2025 it fell to 3.9%.

According to CISA, the automotive industry is the main consumer for the country’s steelmakers. Last year, the production of flat products used in this industry reached 40 million tons.

In May 2025, China increased its steel exports by 9.9% compared to May 2024 to 10.58 million tons. The figure was up 1.1% month-on-month.