Domestic Competition Pushes Chinese EV Firms to Expand Internationally

With dozens of brands selling battery electric and plug-in hybrid cars in China, competition in the world’s largest electric vehicle market has grown incredibly fierce. Although China’s vehicle market is incredibly vast, there just isn’t enough room for the more than 100 electric vehicle companies that are currently fighting to gain a foothold. 

As a result, many Chinese electric vehicle companies are looking beyond the country to foreign markets that still have untapped electric vehicle demand. These companies have one major advantage compared to other automakers: their EVs are cheap and affordable. 

While the average electric car is much more expensive than a comparable internal combustion engine (ICE) vehicle, many of the EVs manufactured in China are even cheaper than ICE vehicles. This makes them incredibly competitive in foreign markets where consumers rarely have access to affordable electric cars. And as competition heats up in their home markets, many Chinese EV makers have no choice but to seek less congested markets abroad. 

However, expansion into foreign markets isn’t easy. In Europe, the European Commission raised the alarm when thousands of Chinese-made electric cars began streaming into the European Union, resulting in an investigation that led to the imposition of steep import tariffs on electric cars manufactured in China. 

After U.S. and Canadian authorities placed 100% import tariffs on Chinese EVs as well, Chinese automakers were effectively locked out of two of the largest vehicle markets on the globe. Companies like BYD have found success in foreign markets in Asia and South America, but others haven’t been so lucky. 

Neta Auto, a Chinese EV firm based in Shanghai, is currently being investigated by Thailand’s Consumer Protection Board for allegedly failing to deliver purchased cars on time, delaying or refusing to process refunds, lack of transparency, and potentially misleading contract terms. 

Thailand is one of the top electric vehicle markets in Asia, and its investigation into Neta Auto’s conduct comes just as the firm begins bankruptcy restructuring back home. The investigation raises questions about whether the competition within China’s EV market is forcing smaller players like Neta Auto to expand to foreign markets before achieving financial stability. 

Thailand’s consumer watchdog sprung into action after it received countless complaints from aggrieved Neta Auto customers. While many EV buyers in China are often left without after-sales support when electric vehicle startups go under, this may be the first time customers in foreign countries experience it as well. In 2024, there were over 30 Chinese electric vehicle brands expanding into foreign markets even though many of them still hadn’t turned a profit in their home market. 

As global demand for electric vehicles continues to grow, only the most resilient and well-capitalized Chinese EV firms are likely to succeed abroad. Without firm financial footing and strong customer service infrastructure, some automakers may risk damaging their reputation before they can establish a meaningful presence in overseas markets. 

The pitfalls of premature foreign expansion experienced by Chinese auto firms could have lessons for other players in the automotive space like Massimo Group (NASDAQ: MAMO) that have ambitions of having a global footprint. 

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