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You might ask, "Why would an entire industry purposely lose money"? The answer is simple, the primary objective was to capture and dominate market share by starving out its competition. To achieve this, at least 16 Chinese automakers ruthlessly slashed prices on new models. 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.

This mathematically unsustainable business model has predictably hit a wall. Faced with a looming sector-wide collapse, the Chinese government enacted regulatory changes that functionally banned automakers from selling vehicles below their production costs. This decisive legal change, combined with surging raw material costs " for inputs such as lithium carbonate and other raw materials used in new EVs " has forced automakers to abruptly abandon their hostile pricing strategies, remove or reduce customer discounts, and raise vehicle prices. All while simultaneously looking outward to continue sales growth via exports.