SHANGHAI - Tesla and China’s top electric vehicle (EV) makers including BYD pledged to maintain fair competition and avoid “abnormal pricing” in the world’s biggest EV market, signalling a possible end to the 2023 price war that has shrouded the industry.

A signing ceremony took place at the China Auto Forum on Thursday in Shanghai, with executives from 16 carmakers on stage to acknowledge and commit to the four points laid out in the pledge. Other automakers involved included Nio, Xpeng, Geely and Chery Automobile.

Tesla triggered the price war at the end of 2022, prompting other major brands to join in with steep discounts in the earlier part of 2023 to attract customers as sales slowed.

Billionaire Elon Musk’s Tesla and BYD, China’s biggest car brand, were at the forefront of the battle, cutting prices by an average of 6 per cent through the first five months of the year.

The price cuts drew the ire of some customers who had already purchased vehicles, including disgruntled Tesla owners, who went to stores and distribution centres to complain.

Weak consumer sentiment in the wake of the Covid-19 pandemic weighed on the auto industry, and a build-up of inventory paved the way for discounting.

The Ministry of Industry and Information Technology (MIIT) had directed the China Association of Automobile Manufacturers to bring the 16 companies together to sign the agreement, MITT minister Miao Wei said at the event in Shanghai.

The automakers also pledged not to mislead consumers and help stabilise growth and avoid risks.

Here are the translated details of the agreement, which is non-binding:

• Adhere to industry rules and regulations, regulate marketing activities, maintain fair competition and not disrupt fair competition with abnormal pricing.

• Pay attention to marketing and publicity methods, and not exaggerate or use false publicity to attract attention or gain new customers.

• Put quality first, and improve lives with high-quality products and services.

• Promote core socialist values, actively fulfil social responsibilities, and take on the heavy responsibility of maintaining steady growth, strengthening confidence and preventing risks. BLOOMBERG