Beijing - Chinese regulators are not happy with the price war brewing in their automotive sector, but industry players and analysts will only see a surge in competition.

"A carmaker led a significant price cut, and many companies followed suit, triggering a new round of 'Price War' panic," the China Automobile Manufacturers Association said in a Chinese statement on Saturday.

Government-linked agencies are being filmed by electric car giants BitThis triggered the latest round of discounts on May 23, which included over 30% of its car models.

The association said: "Disorderly' price wars exacerbate vicious competition." It requires companies to comply with fair competition rather than monopolize the market or "dump" goods at prices below production costs.

People's Daily, the official newspaper that ruled the Communist Party of China, then said in an article: "'There is no winner in the price war, let alone the future." This is based on the Chinese translation of CNBC.

The ministry will increase regulation of non-production competition and cooperate with other departments to enforce laws promoting fair competition, the report said.

The ministry did not immediately respond to a request for comment. BYD referred CNBC to comments from the Chinese state media, which said the automaker said it firmly supports the Manufacturing Association’s call for a healthy market.

There is even a buzzword in China to describe this excessive competition, which is a competition: nei juanor “interaction”.

Over the past few months, China's top leaders have increasingly called for a resolution involving interactions. The term was mentioned in the annual work report of Chinese Prime Minister Li Qiang in March. Market regulators also called for a “full correction of ‘interactive’ competitions” at a meeting last month.

Analysts point out that BYD's latest price cut is actually a formal discount that may be received in China's "Trade Subsidy Program", which aims to increase consumption.

Despite its market share of nearly 30%, BYD also faces competitive pressure, Nomura analysts noted in a report on Monday.

The automaker, which counts Warren Buffett as an early investor, reported a 14% sales increase last month, a year-over-year increase of 19% in April.

"Given the current oversupply situation in the Chinese auto market, we believe the most intense competition phase has not yet arrived until we can see meaningful market integration in the future," Nomura analyst said.

Zhang Xi, an analyst at the China Automobile Dealers Association, said last week that despite the remarks, it did not have much effect on market competition. He added that other countries are also watching the fierce competition in the Chinese auto market and its significance to the local auto industry.

According to data published on social media by Cui Dongshu, secretary general of the China Bus Association, the average price of cars exported from China has fallen before 2023 and has previously reversed the upward trend.

Data shows that the average export price per car for China's car sales to Germany has dropped to $21,000 this year, down from $30,000 in 2023. In Mexico, the main destination for Chinese auto exports is the exception, with an average price rising to $13,000, up from $12,000 two years ago.

According to Nomura, retail prices of automobiles have fallen by about 19% ($22,900) in the past two years.

There are other signals that there is too much supply to rush into electric vehicles.

Wei Jianjun, chairman of Great Wall Motors, said in a Sina Finance interview in Mandarin on May 23 that the "strange phenomenon" of used cars has been sold.

Vehicles are registered as sales or delivery by automakers and are only sold on the second-hand market, which has inflated sales volumes. But this has caused "too much chaos" and prompted WEI to call for better regulation in the industry.

The market for China's fast-growing only battery and hybrid vehicles has been lowered several times over the past two years.

Price wars have not reached their peak yet, "competition will become more intense in the next five years," EV Startup His CEO Mi Peng told Chinese media last week that the company has been verified by CNBC.

"It's just an 'appetizer' for what's about to happen," he added. He said Xpeng is not competing on price, but will compete on technology and expand China to the rest of the world.

The startup is committed to making its driver assistance systems a selling point and has offered over 30,000 cars a month over the past seven months. Last week, Xpeng released its largest version of MONA 03, at 129,800 ($18,020), nearly 17% cheaper than the low-priced model originally revealed in August.

Like most electric vehicle startups, Xpeng reported losses incurred about $90 million in the first quarter. NeoAlready focused on more premium vehicles, Tuesday reported a loss of $949.6 million in the first quarter.

However, Chinese smartphone companies Millet A company spokesman confirmed to CNBC that it predicted its electric vehicle business would make a profit in the second half of the year. The company entered the electric car market last year with the SU7 sedan being cheaper than Tesla's Model 3, and is expected to use a YU7 SUV with the Model Y this summer.