BEIJING — China’s leading electric vehicle battery manufacturers pledged Monday to shorten payment cycles for suppliers, joining broader government-backed efforts to improve financial stability across the country’s increasingly competitive automotive industry.
The commitments come as prolonged price wars, slowing consumer demand and shrinking profit margins have placed mounting financial pressure on automakers and their suppliers, many of whom have complained about extended payment delays that have strained cash flow and limited investment.
Under a new initiative introduced by the China Automotive Battery Innovation Alliance, major battery manufacturers agreed to settle payments to suppliers within 60 days. The move aligns with regulations introduced by Chinese authorities last year requiring large companies to complete most commercial payments within the same period.
Among the companies announcing their participation were battery giant CATL, CALB and Sunwoda, all members of the industry alliance representing China’s largest power and energy storage battery producers.
The alliance also encouraged member companies to ensure prompt payments to small and medium-sized suppliers while negotiating reasonable payment terms with larger business partners to improve financial discipline throughout the supply chain.
China’s Ministry of Industry and Information Technology said 11 battery manufacturers had already responded to the initiative, describing the effort as an important step toward strengthening the long-term health of the country’s battery industry.
The ministry warned that lengthy payment cycles have become a growing concern for suppliers, limiting liquidity and reducing their ability to invest in research, technological development and manufacturing expansion.
“Excessively long payment cycles by power and energy storage battery companies to their suppliers directly strain suppliers’ cash flow, weaken their capacity to invest in technological innovation, and undermine the long-term development of firms across the industrial chain,” the ministry said in a statement.
Although battery prices have declined over the past several years as production expanded and competition intensified, battery packs continue to represent one of the largest cost components in electric vehicle manufacturing.
Smaller suppliers have been particularly vulnerable to delayed payments as they simultaneously face higher production expenses, including increased raw material and component costs. Industry participants have also cited inflationary pressures linked to geopolitical instability, including the conflict involving Iran, as contributing to rising operating costs.
China’s electric vehicle sector has experienced rapid expansion over the past decade, but fierce competition among manufacturers has significantly compressed profit margins. Companies have repeatedly lowered vehicle prices to defend market share, forcing suppliers throughout the production chain to absorb additional financial pressure.
The latest commitments build upon similar measures announced by major Chinese automakers in June 2025 after domestic steel producers publicly criticized prolonged payment delays that affected their operations.
By encouraging faster settlement of supplier invoices, Chinese authorities hope to improve liquidity across the automotive supply chain, support technological innovation and reduce financial risks among smaller manufacturers that remain critical to the country’s leadership in electric vehicle production.
