Causes and Governance of Involutionary Competition in China's New Energy Vehicle Industry

Abstract

Based on the Structure-Conduct-Performance paradigm, this paper explores the generative mechanism of the current involutionary competition within China's new energy vehicle industry. Findings reveal that technological homogeneity and product-service homogenization have normalized price competition, while disruptive technological innovations have reshaped the landscape between established and emerging automakers, leading to market supply-demand imbalances. Furthermore, local government investment priorities and industrial policies have fostered industrial isomorphism. However, in pursuit of economic growth and industrial performance, local governments generally adopt investment incentive policies such as land preferences and financial subsidies in the new energy vehicle sector. This leads to a high degree of overlap in industrial layouts across regions, further strengthening the phenomenon of industrial isomorphism and exacerbating the level of "involution".To overcome this involutionary competition, a coordinated governance system must be established, encompassing technological innovation, industrial ecosystem optimization, market order regulation, internationalization strategies, and consumer environment improvement. This paper aims to provide theoretical support and practical references for promoting high-quality industrial development, while contributing Chinese experience to the global transition toward new energy vehicles.