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A new king has been born in the global car market. The global shift to electric vehicles, symbolized by companies like Tesla and BYD, has seen Chinese automakers displace once-dominant players and upset traditional automakers in Europe, Japan and the United States. It is boosting the possibility of reaching two important milestones.
The China Passenger Car Association (CPCA) estimated in a press conference on Tuesday that Chinese automakers exported 3.83 million passenger cars in 2023, an increase of 62% from the previous year. This is the first time Japan’s exports have exceeded Japan’s exports — according to Reuters, Japanese automakers exported 3.5 million cars from January to November. CPCA estimated that a total of 5.26 million cars were exported from China, compared to 4.3 million from Japan.
Additionally, Chinese brands outnumbered foreign automakers in China, accounting for 52% of the domestic market, an increase of 4.6 points from the previous year.
Struggles for foreign automakers
China’s success is being driven by the domestic shift to EVs. Consumers flocked to affordable hybrid and battery-powered cars with government subsidies. However, foreign automakers, especially Japanese automakers, have been slow to launch new electric vehicle models in China.
These companies are currently struggling to maintain a presence in the Chinese market.
On Tuesday, Volkswagen reported that sales in China increased by 1.6%, with EV sales in particular increasing by 23%. However, its growth rate has lagged behind the rest of the Chinese car market, with the market as a whole growing by 5.6% and electric vehicles in particular growing by 36%, the report said. financial times Citing data from CPCA.
Volkswagen was once China’s largest car brand, but last year it lost the top spot to BYD, the Chinese EV giant backed by Warren Buffett’s Berkshire Hathaway. German multinational pledges 5 billion euros ($5.5 billion) to strengthen China strategy, $700 million to acquire 5% stake in Chinese EV startup Xpeng, which makes premium models like Tesla also invested.
U.S.-based General Motors sold just 2.1 million cars in China last year, down from a peak of more than 4 million in 2017, according to Bloomberg. By comparison, GM sold 3 million vehicles in the U.S. in 2017 and 2.6 million last year. This is the first time since 2009 that GM has sold more cars in the United States than in China.
China poses another problem for GM. U.S. manufacturers will change their supply chains so that all EVs sold in the U.S. remain eligible for tax credits following rule changes aimed at excluding models that rely on Chinese-sourced parts It is said that GM last week promised to make up the difference with $7,500 incentives for models that lose tax credits.
Japanese automakers also reported sales declines into 2023, just as Mitsubishi Motors saw sales from China drop 60% from April to September. The company announced in September that it would cease manufacturing operations in China.
go abroad
However, China’s EV boom may slow down. CPCA expects China EV sales to grow 25% in 2024, slower than the 36% growth recorded last year and the impressive 96% growth recorded in 2022.
The slowdown in the domestic market and increased competition are prompting Chinese automakers to focus more on exports. BYD announced on Tuesday that it will start selling the car in Indonesia next week, following previous expansions in Southeast Asia, Japan and Europe.
BYD sold a record 3 million cars in 2023, 1.6 million of which were battery-powered vehicles. (The company also sells hybrid cars.) Last quarter, the Chinese company overtook Tesla as the world’s top seller of all-electric cars.
US-based Tesla, BYD’s biggest rival in China and perhaps the only foreign automaker to succeed in the country’s nascent EV sector, sold about 948,000 Chinese-made cars last year. Tesla sells cars manufactured at the Shanghai Gigafactory in China and overseas markets.
Some foreign automakers have decided to partner with local EV companies to gain a foothold in the burgeoning EV market. In addition to its investment in VW’s Xpeng, Stellantis, which operates brands such as Fiat and Jeep, is investing $1.6 billion in Leap Motor, another Chinese startup.
UBS estimates that Chinese automakers will export 5 million cars this year. According to reports, 30% of these will be battery-powered vehicles, UBS analyst Paul Gong predicted at a press conference on Tuesday. South China Morning Post.
Mr. Gong cited China’s “technological superiority” and “excellent use of some manufacturing technologies” as reasons for China’s EV advantage.
Still, Chinese automakers haven’t given up on gasoline-powered cars. Part of China’s export boom can also be explained by its trade of internal combustion engine (ICE) cars to Russia. Chinese automakers are rushing to replace Western and Japanese automakers that withdrew from the country in the wake of the 2022 invasion of Ukraine, media outlets reported. Center for Strategic and International Studies.
subject to strict surveillance
The flood of China and Chinese-made EVs is already worrying legacy automakers in Europe, Japan and the US.
In May 2023, Ford CEO Jim Farley said the company views China as its “primary competitor” rather than established companies like GM or Toyota. . Peugeot CEO Linda Jackson expressed similar concerns in the same month, saying Chinese carmakers were the “biggest danger” to the Stellantis brand.
The flood of affordable EVs is now attracting government scrutiny.
Last September, the European Union launched an investigation into whether electric cars manufactured in China receive unfair levels of subsidies from the Chinese government. European Commission President Ursula von der Leyen complained in a speech to the European Parliament that “its prices are kept artificially low by huge state subsidies.”
Beijing retaliated last week by targeting a product in which Europe remains dominant for now: French brandy.
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