BYD, Geely and more than ten other car companies officially announced! Can the 60-day payment term end the industry competition?

Starting from around 8 PM on June 10th, GAC Group issued an announcement, and within less than 12 hours, more than 10 automotive companies expressed their intention to respond to the national call, stating that they would unify the payment terms for suppliers to within 60 days.

GAC Group, Dongfeng Group, FAW Group, Seres Automotive, Geely Group, Changan Group, and BYD all issued statements through official channels from the evening of the 10th to the early morning of the 11th.

By the morning of the 11th (as of 12:30 PM), Chery Automobile, XPeng, Great Wall Motors, Xiaomi Automobile, Leapmotor, Li Auto, SAIC Group, and Nio also announced their follow-up.

At this point, with the statements from leading automotive companies, "the payment terms for suppliers will not exceed 60 days" has likely become an industry consensus in the automotive sector.

Since May of this year, the automotive industry regulatory authorities have aimed to curb the increasingly intense "industry involution," first stepping in to halt the "price war" and advocating for automakers to "protect profits" to maintain a positive cycle in the industry.

Now, with more than a dozen leading automotive companies publicly committing to shorten payment terms, the core value is naturally to protect the interests of upstream supply chain companies and alleviate their financial pressure.

However, a deeper issue has also been raised: Does shortening the payment terms really mean that suppliers will receive payments sooner? Is there more to be done around the 60-day mark?

Automakers still need to take more practical actions to prove that their words match their deeds. We also asked some insiders in the supply chain whether those at the top of the chain are satisfied with this collective commitment from automakers.

Are There Any "Loopholes" to Exploit?

Regarding the commitments from automakers, the main doubts expressed online include the following:

First, "60 days" lacks a specific definition. Does it include the "invoice date," or is it calculated from the time of receipt?

Second, could automakers manipulate payment methods to indirectly delay payment terms?

Third, will the OEMs leverage their industry position to pressure suppliers into accepting payment terms exceeding 60 days?

……

The emergence of these questions is primarily due to the clarity of the automakers' commitments, which are relatively fixed, while the actual implementation can only be known by the suppliers directly involved.

On June 1, 2025, Guo Chuan, Chairman of Konghui Technology, published an open letter titled "I Have a Dream." Ironically, his "dream" is that downstream customers can settle payments within a month of invoicing, and that "wire transfer is the only method of payment."

Suppliers have long suffered from extended payment terms. In a conversation with a friend working in the electrolyte industry, he mentioned that there are indeed various means of indirectly delaying payment terms within the current supply chain The most common is the "combined payment term." For example, a certain downstream customer promised to shorten the payment term to 2 months, but the payment method is "financing bills"—a type of corporate commercial bill—and the commitment period for the "financing bill" is extended to 8 months.

This means that for upstream suppliers, the actual time to receive payment is 2 months + 8 months = 10 months. If suppliers wish to cash out early, they need to pay a discount interest of "4 points."

Of course, from the suppliers he has encountered, most still use "bank drafts" for settlement, which is much more secure than corporate commercial bills, and the discount interest is also significantly lower.

He also mentioned that the "invoice issuance time" is indeed a key issue.

However, regarding the comments from some netizens about "making suppliers issue invoices only six months later," he stated that it is "too exaggerated." The current mainstream situation is that invoices are issued within 1 month.

Therefore, if the "60-day payment term" is calculated from the invoice issuance time, under normal circumstances, the actual payment term may be extended to 90 days.

He admitted that the OEMs have just made commitments, and as upstream supply chains, they have not yet received much information. As for some issues raised by netizens, he could not provide accurate answers.

The fundamental reason is that the position of OEMs in the automotive supply chain is too high, and their power is too strong. Companies that can require upstream suppliers to lower prices every year would not be too surprised if there are any small actions in actual execution.

Gradually Breaking Free from the Vicious Cycle?

Looking back, the "Regulations" issued by the State Council actually impose certain restrictions on corporate payment methods.

Article 11 of the "Regulations" clearly states, "……, small and medium-sized enterprises shall not be forced to accept non-cash payment methods such as commercial bills and electronic vouchers for accounts receivable, nor shall the payment period be extended in disguise by using non-cash payment methods such as commercial bills and electronic vouchers for accounts receivable."

Upon learning this news, this friend described the policy as a "qualitative breakthrough."

It is understood that the payment terms in the electrolyte industry generally range from 1 to 3 months, and after maturity, customers pay with 6-month bank acceptance. He introduced that the further downstream in the supply chain, that is, the closer to the end, the longer the payment terms become. His downstream customers (including power battery manufacturers, etc.) have payment terms of 6 to 9 months.

Such lengthy payment terms directly lead to suppliers feeling "anxious."

"With tens of millions of funds tied up outside, the capital chain could break at any time, and we don't know when the downstream OEM suddenly turns into extreme Weima and Nezha."

He believes that if the payment terms can truly be shortened in actual execution and payment methods are standardized, it will definitely have a positive effect on the entire automotive industry "There must be a leader to improve some unhealthy trends."

However, in the long run, there are still many issues within the entire supply chain of the industry. To truly embark on a virtuous cycle of sustainable development, he believes it will take considerable time.

Is it really perfect?

Interestingly, contrary to mainstream views, he believes that even if car manufacturers announce a reduction in payment terms to 60 days, it does not mean that the industry will pause its "involution."

Because "reducing the payment term to 60 days" itself can also serve as a negotiation condition. For example, a certain car manufacturer might ask suppliers, "I have shortened the payment term, shouldn't you support me and cooperate with me to lower prices?"

Moreover, there are some controversial points behind shortening the payment terms.

Especially for new energy vehicle manufacturers, only a few have actually achieved profitability. For most new energy vehicle manufacturers, their cash flow is equally tight.

If all car manufacturers are uniformly required to shorten payment terms from over a hundred days or even two hundred days to 60 days, it will undoubtedly create significant financial pressure for some manufacturers. In severe cases, it could accelerate the operational crisis of certain manufacturers.

As a result, the viewpoint has emerged that regulatory authorities, while requiring car manufacturers to shorten payment terms and improve supply chain operations, should also introduce corresponding financial measures to provide some support.

Otherwise, if some manufacturers with annual sales of hundreds of thousands of units encounter operational issues, it will only lead to an accelerated collapse of the supply chain, and the social impact cannot be ignored. The series of supplier debt collection and wage arrears issues following the shutdown of companies like HiPhi and ZEEKR are prime examples.

The upstream and downstream supply chains should ideally be in the same boat, but fierce market competition has gradually pushed them towards opposition, creating irreconcilable conflicts.

Regulating the automotive industry's atmosphere by putting pressure on car manufacturers may not be the optimal solution. The key is how to guide the automotive industry out of "involution-style competition" and into a profit-driven model, achieving a virtuous cycle as soon as possible.

Author of this article: Wallace, Yu Fei, Source: Electric Planet, Original Title: "BYD, Geely, and more than ten car manufacturers officially announce! Can a 60-day payment term end the involution in the automotive circle?"

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