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The China Association of Auto Manufacturers (CAAM) decided to delete the price pledge about “abnormal pricing” from a list of commitments as it recognized the pledge had violated the Anti-Monopoly Law of China, according to a statement of the auto industry group at weekend. The statement urged 16 companies that signed the commitments and other automobile firms to observe strictly abide by the Anti-Monopoly Law and related administrative regulations, guidelines, and rules, compete fairly with independent pricing, so as to jointly contribute to the healthy and innovative development of industrial norms.

The surprise change pushed back a recent effort that was supposed to curb ongoing price war ignited by Tesla, Inc. The representative of CAAM and Executives from 16 automakers signed Commitments to Maintain a Fair Market Order in Auto Industry when they participated in a signing ceremony at the China Auto Forum in Shanghai last Thursday. Tesla is the only foreign company made such commitment. Other 15 signees from all the major state-owned automobile groups, the established traditional automakers, the leading EV manufacturer as well as the high-profile EV players in China, including FAW Group Group Co., Dongfeng Motor Co., SAIC Motor Corp., Chongqing Changan Automobile Co. BAIC Group, GAC Group, China National Heavy Duty Truck Group, Chery Automobile Co., JAC Motors, Geely Auto, Great Wall Motor Co., BYD Co. Ltd., Nio In., Li Auto In. and Xpeng Inc.

With the commitments, CAAM aim to fulfill its obligation to protect fair competition, based on the provisions of Article 14 of the "Anti-Monopoly Law" that "industry associations shall strengthen industry self-discipline, guide operators in concerned industry to compete in accordance with the law, operate in compliance with regulations, and maintain market competition order".

The non-binding agreement includes four commitments: first, to insist on complying with industry rules and regulations, regulating marketing activities, maintaining fair competition, and not disrupting fair competition with abnormal pricing; second, to focus on proper marketing and publicity methods, not to exaggerate or use false publicity to attract attention or gain new customers; third, to promote quality workmanship, and meet the public’s demand for a better life with high-quality products and services; the last, to take on tasks to actively fulfill social responsibilities, including promoting core socialist values, making contributions for the country in maintaining steady growth, strengthening confidence and preventing risks.

However, Tesla and another signee took controversial actions just a day after they made such commitments.

Tesla unveiled on Friday a global program called Refer and Earn to give existing customers referrals, covering China, U.S. and other major markets. Under the program, customers can earn $500 in cash back and three-month Full Self-Driving Capacity if they bring a new friend or family member to order a new Model 3 or Model Y through their referral link.

Later Friday, SAIC Volkswagen, a joint venture between Volkswagen Group and SAIC Motor, announced new price cuts for its all-electric ID model ID.3. From that day to July 31, the starting price of ID.3 series was lowered from RMB162,900 to RMB125,900, a decline of RMB23,000, or 23%. While SAIC Volkswagen said the promotion was only offered to 7,000 buyers, 7,000 vehicles almost double the monthly sales of the model this year. Data from the China’s Passenger Car Association (CPCA) showed there were 11,800 ID.3 models sold from January to May, suggesting average monthly sales of about 2,370 units.

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