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China’s EV makers challenge western marques
Eco, hybrid, electric cars
Managing across markets
Greater China
The rapid uptake of electric vehicles in China is primarily benefiting local manufacturers like BYD – which has now overtaken Tesla as the world’s top-selling EV maker – and their low prices are proving increasingly attractive in overseas markets.
What’s happening
- In Q4 2023, BYD reported sales of 526,000 battery-only vehicles, while Tesla managed 484,000.
- China is reported to have overtaken Japan to become the world’s largest auto exporter, shipping an estimated 5.26 million units last year compared to Japan’s 4.3 million units (according to figures from the China Passenger Car Association), with around a quarter of those being EVs.
- The market share of foreign brands in China has fallen from 64% to 44% over the past three years, in large part due to consumers buying cheap, locally made EVs.
- VW invested €5bn in China last year and saw sales increase at a slower rate than the market overall (23% for EVs vs 36% for the market).
- Chinese manufacturers are planning to set up overseas factories in locations like Hungary and Mexico to produce vehicles closer to western markets.
Why China EV exports matter
- Governments in Europe and the US have expressed concerns about artificially low prices for China’s EVs (although China’s makers would point to highly developed supply chains and technical ability), which could lead to increased tariffs.
- Last year the founder of BYD said, “It is time for Chinese carmakers to upend the order of the global automotive industry”. Europe and the US will likely find ways to resist that in their own markets, but legacy western marques could face some big challenges in other parts of the world, notably Latin America and among China’s Belt and Road allies.
Key quote
“Chinese EV makers are sitting on enough capacity to supply 75% of global EV demand. That should keep western automakers awake at night” – Michael Dunne, chief executive of (Asia-focused) car consultancy Dunne Insights.
Sourced from Financial Times, Reuters
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