At Beijing's glitzy car show, the enthusiasm for China's homegrown electric cars was unmistakable.
“I’m interested in cars with more AI,” says Ying Chen, an office worker who is buying a family car. He says he is not considering foreign brands.
Why I wrote this
A story focused on
The rapid growth of China's electric vehicle industry is causing concern among foreign automakers. Foreign automakers have seen their market share decline in China and are preparing for a flood of Chinese-made EVs in their home countries. Will this tension benefit consumers?
China is rapidly emerging as the world's largest EV market, accounting for approximately 60% of global sales by 2023. Domestic automakers increasingly dominate their markets and race to expand globally. China's EV exports surged 77% last year, and Shenzhen-based BYD is now the world's second-largest seller of battery electric vehicles after Tesla.
EVs in China are becoming more technologically advanced and better designed, while also becoming more affordable, thanks to an estimated $173 billion in government subsidies for the EV sector.
As foreign brands scramble to regain ground in China, Brussels and Washington have announced new plans aimed at stemming the influx of cheaper Chinese EVs that could crowd the domestic market and distort prices. The government is considering new tariffs. But experts say locking out Chinese EVs could slow much-needed innovation by U.S. and European manufacturers.
In France on Monday, Chinese leader Xi Jinping said China's vast production of new energy products such as solar panels, batteries and electric vehicles will help ease inflation and contribute to a global push for greener policies. He claimed that
Chinese car enthusiasts flocked to Beijing's glitzy auto show, China's biggest, last week to browse hundreds of sophisticated, high-tech electric vehicles from domestic and international brands.
But the enthusiasm for China's homegrown EVs was undeniable, with crowds flocking to see the latest models, from the best-selling BYD Seagull to the sporty, digitally connected Xiaomi SU7.
“Currently, the smart cars produced in China are relatively advanced,” said Ying Chen, an office worker from Beijing who is buying a family car. “I'm interested in cars with more AI.”
Why I wrote this
A story focused on
The rapid growth of China's electric vehicle industry is causing concern among foreign automakers. Foreign automakers have seen their market share decline in China and are preparing for a flood of Chinese-made EVs in their home countries. Will this tension benefit consumers?
Yin said the company is not considering foreign brands because “the driving technology systems of foreign brands are relatively backward.”
According to the International Energy Agency, China is rapidly emerging as the world's largest EV market, accounting for about 60% of global sales in 2023, compared to 25% in Europe and 10% in the United States. . Last year, Chinese consumers bought more than 8 million EVs, a 35% increase from 2022, and EVs are expected to account for 50% of all car sales in China by 2030.
Domestic EV makers are increasingly dominating the Chinese market while competing to expand exports around the world. According to official data, China's EV exports rose 77% last year to 1.2 million units. Shenzhen-based BYD is currently the world's second-largest seller of battery electric vehicles after Tesla.
Anne Scott Tyson/Christian Science Monitor
At the Beijing Motor Show held in Beijing on May 2, 2024, Chinese car enthusiasts were introduced to the new Xiaomi SU7, the first electric car developed by Chinese consumer electronics company Xiaomi. Check.
The success of Chinese EV manufacturers has raised concerns that cheap Chinese EVs could flood into the United States and Europe. That includes France, where Chinese leader Xi Jinping began his first European visit in five years on Monday. In an effort to avoid a trade war, Mr Xi told French President Emmanuel Macron and European Commission President Ursula von der Leyen that China's vast production of new energy products such as solar panels, batteries and EVs would He said it is contributing to reducing inflation and preserving the environment. transition, a global push for more sustainable policies.
According to China's official statement regarding this remark, Mr. Xi said, “Neither from the perspective of comparative advantage nor from the perspective of global demand, there is no so-called “China's excess capacity problem.'' China and Europe should “address economic and trade friction through dialogue,” he said.
What Chinese buyers want
Chinese EVs are becoming more technologically advanced, better designed, have stronger batteries that charge faster, and are becoming more affordable and attractive. For example, the popular BYD Seagull costs less than RMB 70,000 ($10,000).
American brands such as Buick still enjoy a strong reputation in China for safety and quality. But to succeed in the dynamic Chinese market, it will need to win over increasingly picky customers like Jia Yuzhen.
“I'm looking for sophisticated and high-end colors, looks, accessories and decorations,” says Jia, a business owner from Beijing, as she drives around in her newly launched royal blue luxury van. She added that seat comfort, safety and “driving feel” are also important.
“Overall, it's pretty good,” she says of the roughly $70,000 plug-in hybrid.
Anne Scott Tyson/Christian Science Monitor
Beijing business owner Jia Yuzhen, who is in the process of purchasing an electric car, will inspect a royal blue Buick model GL8 Avenir, a plug-in hybrid luxury van, at the 2024 Beijing Motor Show.
At a vast new factory in southern China's Anhui province, an army of orange robot arms twists, turns and clatters as Volkswagen builds its latest electric car for the Chinese market.
The high-tech facility, which began operations late last year, is a key hub for accelerating the market launch of smart EVs as part of the German brand's “In China, For China” strategy. The company aims to sell 1.5 million EVs annually in China.
“Chinese customers are different,” said Erwin Gabardi, CEO of Volkswagen (Anhui) Automobile Company, where most are first-time buyers looking for modern design, connectivity, driver assistance and in-car entertainment. He points out that this is a young group of people with a lot of experience. “They think maybe he wants to stay in the car for 30 minutes and meditate or do some KTV. [karaoke] We sing songs together while driving. ”
To innovate and advance in China's ultra-competitive market, Volkswagen and other foreign car companies are increasingly partnering with local EV makers as well as Chinese tech companies. Last month, Tesla received permission from the Chinese government to launch self-driving software in China that uses navigation provided by search engine giant Baidu. And Toyota is working with Chinese social media giant Tencent to integrate artificial intelligence and cloud computing into electric vehicles.
Anne Scott Tyson/Christian Science Monitor
Volkswagen (Anhui) Automobile Co., Ltd. employees Sun Haoyu and Li Bin work at the body shop of Volkswagen's electric vehicle factory in Hefei, Anhui Province, on March 28, 2024.
Volkswagen has dominated China's car market for many years, but its share has been shrinking in recent years. It is trying to regain ground by partnering with Chinese companies that make software, AI and high-tech EVs.
“Volkswagen wants to remain the number one international OEM.” [original equipment manufacturer] in this country,” Dr. Gabardi said.
However, whether foreign car companies will be able to fend off the onslaught of Chinese EVs is an open question.
Where will China send its surplus cars?
This is essential as Chinese EV makers are working hard to expand sales overseas, but the domestic market is not large enough to absorb the country's vast EV production capacity.
At Great Wall Motor Co., Ltd. in Baoding, Hebei province, GWM's vice president of operations, Liu Huaxue, is driving a silver Ora “Lighting”, the company's new all-electric sedan, which will be sold in China, other parts of Asia, and Europe. Cat” EV is being unveiled.
“We want to expand everywhere,” Liu says.
Anne Scott Tyson/Christian Science Monitor
Liu Huaxue, vice president of operations at Great Wall Motors, stands in front of the company's new all-electric sedan, which will be sold in China, the rest of Asia, and Europe, April 23, 2024, in Baoding, China.
According to a study by Scott Kennedy of the Washington Center for Strategic and International Studies, the Chinese government will invest an estimated $173 billion in the domestic EV sector from 2009 to 2021 as part of an expansionary industrial policy aimed at monopolizing key technologies. provided subsidies and other support. .
This policy has given Chinese EV makers a huge lead over their foreign rivals. However, it also leads to market distortions and inefficiencies, fueling massive overcapacity in a crowded field of about 200 producers, and triggering an ongoing price war that will drive down EV prices from 2022 onwards. Ta.
This is a major cause of escalating trade tensions with the United States and the European Union, which launched an anti-subsidy investigation into Chinese EV companies last October. Both Brussels and Washington are considering new tariffs aimed at stemming the influx of cheap Chinese EVs, which already face a 25% tariff in the United States.
But locking out Chinese EVs could slow needed innovation by U.S. and European EV manufacturers and harm consumers in those markets, Dr. Kennedy said.
Beijing has denounced Western concerns as covert protectionism and in February mobilized governments to help Chinese EV makers fight foreign regulations.
GWM's Liu sees potential tariffs by the West as a “huge challenge.”
Like other Chinese EV makers, GWM is considering building new production facilities outside China to avoid tariffs, he said. “In the future, we could build local factories in Europe,” he says. “That's pretty much the only option.”
Indeed, at the start of Mr. Xi's European visit, French Finance Minister Bruno Le Maire told reporters that he welcomed BYD to open a factory in France. However, Macron and von der Leyen stressed to Xi that Europe seeks fair trade with mutual market access.
According to the Associated Press, von der Leyen said after the meeting that Europe “will not give up on taking the tough decisions necessary to protect our economies and security.”
