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Longtime Slashdot reader schwit1 shares a report from Autoblog: For years, the Chinese auto industry has employed a hostile price war to kneecap global competitors. Armed with massive state subsidies, cheap raw materials, and an aggressive "scale-first" business model, Chinese automakers flooded the market with electric vehicles priced so low that legacy manufacturers stood no chance to compete. How did they do it? Simple, they couldn't. They did it anyway. Reports from CarNewsChina show that Chinese automakers have been selling vehicles at a loss until a recent law passed by the Chinese government banned below-cost sales of new vehicles. During the ongoing sales slump in China caused by rolled-back subsidies and direct government intervention banning below-cost sales, the truth behind the rapid expansion of the Chinese auto industry has been exposed. "By the first quarter of 2026, China captured 32 percent of the global auto market, with its New Energy Vehicles (NEVs) controlling an incredible 61 percent of global share," the report notes. Yet that dominance has come at a steep cost: throughout 2025, "the profit margin for China's auto industry plunged to 4.4 percent and dropped further to a historic low of 3.2 percent in early 2026." "Gross profit, not net profit, per vehicle, plummeted to a mere $2,000. We can expect the net figure to be loss-making." Autoblog adds: "Data shows over 70 percent of Chinese car sales were loss-making. This left more than half of the country's auto industry in the red. Great Wall Motor (GWM) even saw net profits drop 17 percent despite steady revenue growth." China's EV price war has now hit a wall. New regulations are discouraging below-cost sales, rising material costs are forcing automakers to cut discounts and raise prices, and reduced tax incentives are weakening domestic demand. To sustain growth, manufacturers are increasingly turning to exports.

Read more of this story at Slashdot.