China is becoming the No.1 auto exporter: more auto and especially more EVs!

A note by Xieshu Wang, PRAXI China Desk Business Development Consultant

According to data from the China Association of Automobile Manufacturers (CAAM), China exported 2.341 million vehicles in the first half of 2023, a year-on-year increase of 76.9%; the total vehicle export value was US$46.42 billion, a year-on-year increase of 1.1 times. Data from the Japan Automobile Manufacturers Association shows that Japan’s automobile export volume in the first half of this year was 2.02 million units, an increase of 17% compared with the same period last year.

New energy vehicles (NEVs) have become the main contributor to the growth of automobile exports of China. According to data from the Ministry of Commerce, in the first four months of 2023, the proportion of NEV exports in the overall export value increased to 42.9%, and their contribution to the growth of automobile exports reached 51.6%. According to CAAM’s prevision, China’s automobile exports this year will reach about 4 million units.

The Chinese government’s supportive industrial policy and massive investments from private sector have boosted China’s competitiveness in the industry. The Chinese EV industry is now considered several years ahead of foreign legacy automakers in terms of technology and scale, and even more so in terms of cost advantage.

However, massive investments and strong internal competition have resulted in the overcapacity of vehicles produced in the Chinese factories. Meanwhile, sales volumes in China peaked in 2017 and are set to slow down for the coming years, due to general domestic economic weakness. The overcapacity problem is hitting both local companies such as Chery, SAIC, BYD, Geely and Changan, and an increasing number of foreign groups including Tesla, Ford, Nissan and Hyundai, which are now repositioning their Chinese factories towards export markets.

As of the end of July, 2.8mn vehicles had been exported from China this year, including 1.8mn petrol-powered vehicles, as more domestic consumers opt for EVs and second-hand cars. Geely’s Coolray crossover is one of the most popular models exported to the sanction-hit Russia. About 1/5 of Tesla’s EVs sold in Europe are made in its Shanghai Gigafactory. BYD is spearheading China’s EV exports into developed markets, targeting 400,000 units next year, double this year’s forecast. Acquired brands like SAIC MG are also targeting overseas markets for growth.

Also read the related FT article here