In a surprising turn of events, the China Association of Auto Manufacturers (CAAM) has done a complete U-turn on its commitment to avoid “abnormal pricing.” This unexpected move comes just two days after 16 automakers, including Tesla (NASDAQ:TSLA), made the pledge, citing concerns about antitrust law.
Initially, the joint declaration organized by CAAM on Thursday was seen by some as a sign of détente in the ongoing price battle, which has been putting the entire industry’s profitability at risk. Notable participants in the agreement were Chinese electric vehicle (EV) manufacturers Nio (NYSE:NIO), Li Auto, and Xpeng (NYSE:XPEV).
However, Tesla, led by the enigmatic Elon Musk, launched a global initiative on Friday, granting customers additional incentives through referrals from existing buyers. This marketing strategy has long been employed by traditional automakers to bolster sales.
In a statement published on its website the following day, CAAM acknowledged that the pricing commitment had violated China’s antitrust legislation. Consequently, the association decided to expunge it from the list of obligations signed by the automakers, which had been overseen by an official from the Ministry of Industry and Information Technology.
CAAM emphasized that it would urge all 16 companies involved and other members of the association to strictly adhere to the antitrust law, fostering fair competition with independent pricing.
It seems the automotive industry’s price saga has taken yet another unexpected twist, leaving many pondering the implications for future market dynamics. Will this reversal trigger a new wave of unconventional pricing strategies? Only time will reveal the true impact of this unforeseen turn of events.