Last year was a major year for Chinese electric vehicle manufacturers. Generous subsidies from Beijing allowed EV companies from China to flood the international market, particularly Europe, with incredibly cheap electric cars.
Furthermore, Tesla faced incredibly stiff competition from automaker BYD, which ultimately surpassed Tesla in EV sales in the last quarter of 2023 to become the top-selling electric vehicle brand on the globe. Although Tesla’s decade-long head start allowed it to outclass established automakers such as Ford, General Motors and Honda, China-based electric vehicle manufacturers such as BYD have caught up to the Texas-based carmaker and are now giving Tesla a run for its money.
China’s electric vehicle industry is quite new, but Chinese EV companies are putting significant pressure on established carmakers in Europe, thanks to their affordable EV offerings. There has been such a major influx of Chinese electric cars into Europe that European Union leaders launched a probe into heavily subsidized EVs from China because they were pricing local automakers out of the EU market. In the United States, several automakers are scaling back their electrification plans after pouring billions of dollars into EV development but still failing to catch up to Tesla.
While American and European carmakers have struggled to make their mark on the nascent electric vehicle industry, Chinese automakers are rapidly expanding outside the country and capturing foreign markets. Even though these companies are significantly reliant on government subsidies to reduce their prices, their potential on the global stage should not be discounted.
Alongside BYD, several other Chinese automakers plan to outcompete European and American automakers in the European market by offering cheaper electric vehicles. These companies may even be able to access the North American market despite political tensions between China and the U.S. BYD buses have been operating in certain regions in the U.S. and Mexico for several years now, and several BYD passenger electric cars are already available in Mexico.
China’s swiftly growing electric-vehicle sector also threatens Europe’s and America’s auto-export industries. America earns around $55 billion from car and truck exports while the European Union car export market is worth a whopping $174 billion.
As electric vehicles become more prevalent in the truck and passenger-vehicle segments, and China’s growth in these sectors continues to grow, China could steadily reduce the value of vehicle exports from the West, particularly in emerging markets with a need for cheaper electric cars.
Ford CEO Jim Farley noted in 2023 that the company sees Chinese automakers, not established giants such as Toyota or General Motors, as their top competitors.
North American-based EV makers such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) now have to do a lot more to claim a sizeable share of the EV market as Chinese competitors take steps to dominate not just the local market but the international one as well.
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