Intensified Market Rivalry

In late 2023, William Li, Chairman and CEO of NIO, foresaw: “The competition within the RMB 200,000 to RMB 300,000 automotive market segment will become even more fierce in the coming years (2024-2025).” Now, with just over two months left in 2026, the competitive landscape in this price bracket continues to intensify.

Competition within this price range is not only crucial for Chinese brands to solidify their presence in the mid-market and capture profitable segments but also represents the final stronghold for joint-venture brands to defend their market share. Consequently, this arena has attracted the core strengths of the entire industry, with a continuous influx of high-profile new vehicle launches driving the level of “involution” in the RMB 200,000-RMB 300,000 segment to unprecedented heights.

Unlike previous hardware-centric competitions, leading brands are now pursuing unique positioning, transitioning from “selling configurations and specifications” to “selling experiences, scenarios, and lifestyles,” in an attempt to establish brand and product barriers that are difficult to replicate.

The Xpeng G9L, launched on September 17, exemplifies Xpeng's commitment to the intelligent driving domain, achieving three “industry firsts” and one “industry innovation.” It is the first in the industry to feature full-scenario intelligent assisted driving, the first to achieve mass production of 800V ultra-fast charging for both vehicles and charging piles, and the first model under RMB 500,000 to be equipped with intelligent dual-chamber air suspension.

The Mengshi X700, with its first mass-produced vehicle rolling off the line on October 10, marks the first heavyweight model resulting from the strategic cooperation 2.0 between Mengshi and Huawei Qiankun. Positioned as a luxury intelligent all-terrain SUV, it adheres to the product philosophy of “more off-road capable than family vehicles, more intelligent than off-road vehicles,” catering to diverse usage scenarios such as urban commuting, family outings, and outdoor exploration. It aims to break away from the traditional family SUV mold and achieve cross-border breakthroughs.

The product strategies embodied by multiple models, including the Li Auto (i6, L6, L7), Lynk & Co 900, BYD Tang, Weimar's entire lineup, and the IM LS8, indicate that competition in the mid-to-high-end new energy vehicle market is no longer centered on specifications but on shaping lifestyles.

A new competitive landscape is gradually taking form.

Technological Democratization

Configurations once exclusive to luxury cars priced at RMB 500,000 are now becoming standard features in models priced between RMB 200,000 and RMB 300,000.

The Xpeng G9L is built to the standards of Xpeng's flagship 9-series SUVs, incorporating numerous flagship configurations shared with the GX model. It comes standard with over a hundred leading configurations typically found in models priced at RMB 500,000, such as ENC+RNC active noise cancellation, paired with 122 acoustic insulation materials throughout the vehicle, nine double-layer laminated soundproof glass panels, Michelin quiet tires, rear independent zero-gravity seats, an intelligent four-motor executive center console, a 270° three-sided electric physical sunshade, a sterile air-cooled dual-opening dual-zone car refrigerator, and a 21.4-inch 3K eye-care touch entertainment screen.

In terms of intelligent driving, it is equipped with up to three Turing AI chips, delivering an effective computing power of 2250 TOPS, and is the first to feature the second-generation VLA version of Xpeng's Turing AI intelligent driving system. Meanwhile, the Xpeng G9L comes standard with a flagship chassis typically found in million-yuan models, featuring dual-chamber air suspension, DCC intelligent variable damping shock absorbers, and a lightweight all-aluminum suspension chassis.

“Products from the 9-series that would have cost RMB 1 million ten or twenty years ago can now be found in models priced at RMB 300,000, including the GX and G9L, offering capabilities comparable to those million-yuan models. This is a sign of industry progress,” said Wu Anfei, General Manager of Xpeng's Product Matrix. The core goal is to create a vehicle without rivals in this class.

According to Wu, the Xpeng G9L was designed from the outset not simply as a six-seater converted into a five-seater but as a completely redesigned five-seater model with a new golden proportion, addressing real customer needs today. Xpeng aims to prioritize safety, continuously raising the safety baseline, and maximizing the space that users value most.

The Mengshi X700, on the other hand, adopts a differentiated scenario-based approach, breaking market barriers with its core positioning of “one vehicle replacing three.” It simultaneously caters to urban commuting, family outings, and off-road exploration, meeting users' diverse and multi-scenario vehicle needs.

“Facing the new lifestyle of intelligent off-roading, we hope to venture outdoors with our users. In addition to exceptional products, we also need supporting campsites and diverse forms of interaction,” said Wan Liangyu, CEO of Mengshi Motors. “Intelligent off-roading” is a concept first proposed by Mengshi and Huawei Qiankun. We not only offer robust technology and products but also hope to connect technology and products with users through collaboration with brands and car enthusiasts, jointly experiencing the new lifestyle of intelligent off-roading.

Meanwhile, Wan emphasized that Mengshi and Huawei Qiankun have jointly pioneered a new lifestyle. True exploration requires genuine long-distance capability, ensuring that the vehicle is reliable for every departure and return.

Deep Market Consolidation

The strong breakthrough of domestic vehicles, the defense by joint-venture models, and the price reductions by luxury cars have all made the competition in the RMB 200,000-RMB 300,000 price range far more intense and challenging than ever before, with particularly fierce competition.

On October 10, data released by the China Passenger Car Association showed that in September, retail sales of passenger cars nationwide reached 1.702 million units, a year-on-year decrease of 24%. From January to September, cumulative retail sales of passenger cars were 13.418 million units, a year-on-year decrease of 21%. Data released by the China Association of Automobile Manufacturers on October 12 showed that in September, automobile production and sales reached 2.99 million and 2.956 million units, respectively, down 8.7% and 8.4% year-on-year. The traditional “Golden September” sales peak completely failed to materialize. This demonstrates that frequent new model launches have not prevented the weakness in the passenger car market.

In the first half of this year, nearly 600 new models were launched, but the vast majority peaked immediately upon release, struggling to maintain popularity beyond three months, quickly fading into obscurity after brief exposure. This has further amplified the Matthew effect in sales, with the market highly concentrated around top-selling models, while a large number of models at the tail end face inventory backlogs and difficulties in moving volume.

Third-party statistics indicate that in the first half of 2026, there were 227 new energy SUVs with sales records, with nearly 70% of models selling fewer than 10,000 units in total over six months, averaging just 1,700 units per month. According to Caijing magazine, among models on sale in the first half of this year, over 40% sold fewer than 1,000 units per month. After the launch of numerous new models, many failed to generate sustained and stable orders, falling into the dilemma of “stagnant sales immediately upon launch.”

He Zhiqi, Executive Vice President of BYD, bluntly stated: “Developing a new model requires billions in investment and a development cycle of over two years. However, as soon as the product hits the market, its popularity fades within three months, cooling down rapidly before it even has a chance to gain traction.”

On one hand, the industry is flooded with new model launches, while on the other hand, the domestic market has declined by 20% year-on-year. Competition has long surpassed “intense” and entered a brutal phase of market share contention.

After the decline of traffic dividends, the strategy of flooding the market with new models is no longer seen as a surefire way to capture market share, with increasing skepticism from both consumers and industry insiders. The underlying product architecture, a complete verification system, and long-term reliable experience have become the new benchmarks for market evaluation.

He Xiaopeng also proposed a distinct product strategy, expressing hope for the emergence of more products that can be developed with a single model and a unified development logic for the global market. To achieve global synchronous development, verification standards for vehicle durability, reliability, and stability must be more comprehensive and stringent. “I have always believed that a vehicle needs to be well-rounded to be safer, especially for luxury vehicles, as it ensures a good experience in various extreme conditions, which is truly crucial for owners of high-end flagship models,” he said.

The massive supply of new products, combined with a continuously shrinking market and users' caution toward hastily developed vehicles, is significantly accelerating the pace of elimination in the automotive industry. This consolidation is not only eliminating slow-selling models but also outdated product development logics. In this process, several automakers will undoubtedly suffer severe setbacks.

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