[SMM Analysis] Will the Price War in New Energy Vehicles Hit the Brakes by 2026? Rising Battery Costs and Regulatory Red Lines Shift the Competitive Logic of New Energy Vehicles

To regulate pricing practices in the automotive industry, the State Administration for Market Regulation drafted the "Compliance Guidelines for Pricing Practices in the Automotive Industry (Draft for Comment)"

(https://www.samr.gov.cn/hd/zjdc/art/2025/art_4c17c28a483d4c5f89d619e588222aee.html)

Cost side, new energy vehicle prices in 2026 no longer have room for continuous declines without cost constraints, and the phased rise in battery costs will become an important bottom support factor. After the significant pullback in 2023–2024, power battery industry chain prices are at historically low levels, with some segments even operating under pressure for an extended period. Since entering H2 2025, as the exit of lithium resources from the market gradually completes and signs of lithium chemical prices bottoming out emerge, while cathode materials, separators, electrolytes, and other segments see enhanced bargaining power against the backdrop of slowing technological iteration and increasing industry concentration, the downward trend in battery costs has clearly slowed down. Looking ahead to 2026, with continued growth in new energy vehicle sales and simultaneous expansion in ESS demand, battery manufacturers' production schedules remain high, coupled with expectations for upward adjustments in some raw material prices, overall battery pack costs are likely to stabilize at low levels and experience a mild rebound. This means that automakers' room to support significant vehicle price reductions by compressing battery costs has significantly narrowed, especially impacting low and mid-end car models where battery costs account for a higher proportion.

Against this backdrop, the latest pricing behavior regulatory policies issued by the State Administration for Market Regulation will impose "hard constraints" on new energy vehicle prices in 2026, changing the past competition model that relied on extreme price wars for volume. With the release and implementation of the Compliance Guidelines for Pricing Practices in the Automotive Industry, regulatory oversight has significantly strengthened for practices such as selling below cost, false discounts, and ambiguous promotion conditions, requiring price adjustments to have reasonable justifications and imposing higher information disclosure and compliance requirements for promotional methods like subsidies, financial schemes, and gifts. The core of this policy direction is not to suppress market competition but to limit disorderly and irrational involution. At the practical implementation level, this will significantly reduce automakers' room for "simple and direct price cuts," especially when costs no longer have a basis for continuous decline, price regulation will become an important exogenous variable constraining further aggressive price reductions in the industry.

Therefore, new energy vehicle price competition in 2026 will be constrained by both the cost bottom and regulatory lines, resulting in stronger resilience in industry price trends. On one hand, the phase-out of purchase tax incentives and adjustments to national subsidy policy structures keep end-use demand highly sensitive to prices, leaving automakers without a market foundation for systematic price increases; but on the other hand, the stabilization and rebound of battery costs and stricter price regulation significantly reduce the marginal benefits for automakers to continue seizing market share through substantial price cuts. Under this combination, the price war for new energy vehicles will not disappear but will shift from absolute price competition to structural profit concession competition, including methods such as financial interest subsidies, trade-in subsidies, configuration optimization, and service rights bundling, with the overall concession margin significantly narrowing compared to the previous two years.

By price segment, the impact of cost and regulatory constraints varies significantly across different ranges. In the 100,000–150,000 yuan range, battery costs account for a high proportion of the total vehicle cost, making it most sensitive to fluctuations in raw material prices. Coupled with price regulations restricting low-price dumping, the room for further decline in the actual transaction prices of car models in this segment is limited, with more emphasis on policy subsidies and financial schemes providing support. The mainstream market of 150,000–250,000 yuan will become the core area of price competition in 2026. Automakers will maintain stable guidance prices while releasing limited concessions through compliant means, resulting in a slow and controllable decline in transaction prices. The mid-to-high-end market above 250,000 yuan is relatively less affected by battery costs and price regulations, with the focus of competition shifting more towards intelligence, brand power, and service systems, leading to overall price stabilization.

Overall, new energy vehicle prices in 2026 will enter a new phase characterized by cost support at the lower end, demand constraints at the upper end, and regulatory constraints in the middle. Under the dual effects of rising power battery costs and strengthened price behavior regulation, the industry can no longer rely on the previous competitive model of continuous significant price cuts to boost sales. It is expected that the average transaction price of new energy vehicles in 2026 will mainly experience mild fluctuations and structural differentiation, with the intensity of the price war significantly lower than in 2023–2025. The industry's competitive focus will further shift towards cost control capabilities, product strength, and operational quality.

Lithium Battery and Terminal Analyst Yang Le 13916526348