Chinese firms gain edge abroad despite hurdles
Mainland brands are becoming increasingly competitive, analysts say
Chinese battery electric-vehicle (BEV) manufacturers have become increasingly competitive in the global market despite policy roadblocks from the European Union and the United States, as the country’s carmakers shift focus to exports at a time of slowing domestic sales in the world’s second-largest economy.
Exports remained strong in the third quarter of this year when Chinese brands sold more than 130,000 battery electric vehicles abroad, a fourfold increase compared to the same quarter last year, data from market research firm Counterpoint showed.
Chinese carmaker BYD has now caught up with market leader Tesla, accounting for 17 per cent of the global passenger BEV unit sales in the third quarter, up from 13 per cent a year earlier.
Counterpoint expects BYD to surpass Tesla in the fourth quarter to become the world’s bestselling electric-car brand.
“The influx of low-cost BEVs from China has been adversely affecting Europe’s domestic carmakers,” Counterpoint research director Jeff Fieldhack said. “This underlines the growing competitiveness in the BEV market, which is expected to intensify further.”
To counter China’s influence in the Western car market, both Europe and the US are expected to make substantial investments to secure access to essential minerals required for making electric-car batteries, to improve the affordability of their cars and reduce dependence on China, according to Soumen Mandal, a senior analyst at Counterpoint.
Exports of Chinese electric cars in the third quarter were strong despite the sluggish domestic sales in the same period. Domestic sales grew by only 11 per cent year on year in the third quarter, below the global average of 29 per cent, according to Counterpoint.
China holds 58 per cent of the global electric-car market, taking pole position ahead of the US, which accounted for around 12 per cent, according to Mandal.
He expects annual electricvehicle sales to reach almost 10 million units globally next year.
Faced with the intensifying price competition in China’s fast-growing but crowded market, more Chinese electric-car makers are turning overseas, with leading players Xpeng, BYD, and Leapmotor expanding footprints in markets like Europe.
In October, China’s electricvehicle exports, including BEVs and plug-in hybrids, to the EU topped US$2 billion for the first time, 30 per cent higher than the same month last year, according to Chinese customs authorities last month.
In September, the EU launched an investigation into Chinese-made electric vehicles, alleging Beijing offered state subsidies to carmakers to help them keep their prices low. China has condemned the EU’s move, calling it “sheer protectionism”.
The US Inflation Reduction Act, introduced last year, also focused on localising electricvehicle manufacturing supply chains to reduce its dependence on China, although it has allowed some mainland-sourced battery minerals to be eligible for tax credits.
Despite the investigation into suspected state subsidies, Chinese electric-vehicle makers were expected to maintain their edge in the EU market with sales growth of 30 to 35 per cent in 2024, Wu Bohua, an analyst at Changjiang Securities, said in a report on Tuesday.
Electric-car sales on the mainland, including plug-in hybrid vehicles, would grow by 20 per cent next year, slowing from an expected 30 per cent year-on-year rise this year, according to Fitch Rating last month.
“The market [in China] will continue to grow, but heightened competition may force major players to offer discounts to attract buyers, hence affecting their profitability,” said Ivan Li, fund manager at Loyal Wealth Management in Shanghai.
“Besides, uncertain economic prospects are weighing on millions of Chinese consumers, deterring them from making decisions on purchases of bigticket items.”