SHANGHAI - As Shanghai sweltered in a heatwave in June, the car factory where Mike Chen works switched production to night shifts and dialed down the air-conditioning.
For Chen, toiling through the early hours in his sweat-soaked uniform, it was the latest slap in the face after cuts in bonuses and overtime slashed his monthly pay this year to little more than a third of what he earned when he was hired in 2016.
Chen, 32, who works for a joint venture between China's state-owned car giant SAIC and Germany's Volkswagen, is far from alone. Millions of auto workers and suppliers in China are feeling the heat as an electric vehicle price war forces carmakers to shave costs anywhere they can.
"SAIC-VW used to be the best employer and I felt honored to work here," said Chen. "Now I just feel angry and sad."
The price war Tesla triggered has sucked in more than 40 brands, shifted demand away from older models and forced some automakers to curb production of both EVs and combustion-engine cars, or shut factories altogether.
Reuters interviews with 10 automaker and supplier executives, as well as seven factory workers, point to a broader industry in distress, with penny-pinching on everything from components to electricity bills to wages - which is in turn hitting spending elsewhere in the economy.
Asked about the SAIC-VW plant where Chen works, which makes combustion-engine cars, VW said pay at joint ventures varied based on working hours and bonuses. It said making cars at night eased the burden on power grids and that healthy, good working conditions were a high priority. SAIC did not respond.
Economists warn that China's auto sector could even become a drag on economic growth because of the fallout from the price war, a stark turnaround for the world's biggest car industry.
The problem is that while there has been huge investment in production capacity, helped by large state subsidies, domestic demand has stagnated and household incomes remain under pressure, economists say.
In the first seven months of 2023, China sold 11.4 million cars at home and exported 2 million, but growth came almost entirely from abroad. Exports lept 81 percent but domestic sales only crept 1.7 percent higher - despite the widespread price cuts.
"The focus on production and supply is lopsided," said George Magnus, research associate at Oxford University's China Centre, adding that inadequate attention to demand ultimately leads to inventory overhang, price cuts and financial stress.
"China really has to learn to walk on two legs."