A BYD Seagull electric minivan is on display during the 20th Shanghai International Automobile Industry Expo at the National Exhibition and Convention Center (Shanghai)
VCG | China Optical Group | Getty Images
DETROIT – Chinese automakers pose a growing threat to their American counterparts – even without selling directly to consumers in the American market.
Sales of Chinese-made cars are rising at remarkable rates in Asia, Europe, and other countries outside those continents. China recently announced that it will export more than 5 million cars in 2023, overtaking Japan to become the largest country in car exports in the world.
This volume of established government-owned companies such as SAIC and Dongfeng, as well as new players such as BYD, Nio and others, has pushed China from sixth place to first place since 2020. This comes amid a decline in US auto exports. Companies like General Motors International operations were cut off. US auto exports in 2022, the most recent data available, fell 25% from their peak in 2016, according to the US Bureau of Economic Analysis.
America – fourth globally in auto exports before 2020 – ranked sixth in the world last year, trailing fifth-ranked Mexico, fourth-ranked South Korea and third-ranked Germany, according to global consulting firm AlixPartners.
“My number one competitor is Chinese automakers,” said Carlos Tavares, CEO of parent Chrysler. Stellantis, during a virtual media roundtable on Friday. “This is going to be a big fight. There is no other way for a global automaker like Stellantis that operates around the world but to go along with the Chinese automakers. There is no other way.”
The threat extends beyond the volume of exports. Chinese automakers have set a new standard for car production and pricing. They are launching new models in record times, and many of them are producing electric cars efficiently and profitably – something that global automakers including US General Motors and… ford motor.
BYD dominance
Auto experts pointed out BYD Company As a prime example of the rise of China’s automakers. The company, backed by the Beijing government, topped the list last year Tesla To become the largest seller of electric vehicles in the world.
Tesla CEO Elon Musk, whose company operates a large factory in China, said Chinese automakers are his Texas-based company’s biggest competitors.
“There are a lot of people who think that the top 10 car companies will be Tesla followed by nine Chinese car companies. I think they may not be wrong,” Musk said. New York Times Dealbook Conference In November.
Rhodium Group estimates that BYD received nearly $4.3 billion in government support between 2015 and 2020, according to The Economist. Beijing has also provided subsidies to stimulate electric car buyers.
Stellantis CEO Carlos Tavares holds a press conference after meeting with unions, in Turin, Italy, March 31, 2022.
Massimo Pinca | Reuters
BYD has broken down a code for low-priced electric vehicles that seems to be pushing the envelope: The BYD Seagull, a small electric car whose starting price is around $11,400, would dramatically undercut American EV prices by less than $15,000 even when factoring in U.S. tariffs. 27.5% on Chinese-made products. Vehicles.
“This is a car that scares me,” Christine Dziczek, an auto policy adviser at the Federal Reserve Bank of Chicago’s Detroit branch, said during the organization’s Auto Insights symposium last week. “How are we going to halve the price of electric cars? China has already done that.”
Matthew Vachaparambil, CEO of auto dismantling and consulting firm Caresoft Global, estimates BYD will make $1,500 from every Seagull unit sold. At worst, the company breaks even, he said.
The company is shipping more vehicles outside China: Overseas markets accounted for about 10% of BYD’s sales of more than 3 million last year, double that share since the beginning of the year, according to Bernstein.
“BYD has an unparalleled cost structure and product innovation capability, stemming from a high degree of vertical integration that will enable the company to thrive in the ongoing electric vehicle race in China and abroad,” Bernstein analyst Eunice Li said in an analysis note last week. . “Despite increasing pricing pressures in China, we expect the company’s focus on overseas and premium segments will support 29% (CAGR) earnings through 2025.”
Growth has become global
With the support of local and federal governments, Chinese automakers have begun to grow in their home country – taking a share of mandatory joint ventures between non-domestic automakers and Chinese companies.
For example, GM’s Chinese market share, including its joint ventures, It fell from about 15% in 2015 to 8.6% at the end of the third quarter of last year.
“What’s happening in China at home? These (new energy vehicle) brands are becoming dominant,” Mark Wakefield, global co-head of the automotive and industrial practice at Alix Partners, said at the Chicago Fed’s auto conference. “It was 26% (market share) a few years ago, reaching more than 50% in 2022 and heading toward two-thirds by the end of the decade.”
BYD’s new luxury brand, Yangwang, is selling its first model, the U8, for more than 1 million yuan (US$160,000).
CNBC | Evelyn Cheng
And growth did not stay at home. Wakefield said Chinese companies have begun expanding into Mexico, Europe and elsewhere.
Chinese companies accounted for 8% of all-electric car sales in Europe as of September last year, and their share could increase to 15% by 2025, according to the European Union. The European Union believes that Chinese electric cars reduce the prices of local models by about 20% in the European market.
The influx of Chinese electric cars has prompted the European Union to launch government support for the industry.
In Mexico, the share of Chinese-made cars with internal combustion engines has increased from 0% market share to 20% of the country’s light-vehicle sales over the past six years, according to Dziczek of the Federal Reserve Bank of Chicago.
“Mexico is the second largest market for Chinese-made cars after Russia,” she said. “They will be on our shores in Mexico in the not too distant future.”
Coming to America
For decades, Chinese auto companies have said they would start selling cars in the United States under their own brands, but none of them have succeeded.
This does not mean that China does not compete in the American market. Aside from key supply chain relationships, there are also a few car brands owned by Chinese companies operating in the US, such as Lotus, Volvo (including its subsidiary Polestar) and niche electric car maker Karma.
American companies, such as General Motors and Ford, already plan to manufacture some vehicles in China to import and sell in the United States. General Motors imports its Buick Envision from China to the United States, while Ford said last year that it would import its next car. Lincoln Nautilus Cross from China.
But until now, an American driver cannot easily buy a Dongfeng, BYD, or any other Chinese-made vehicle in the United States.
2024 Lincoln Nautilus
stronghold
Aside from potential regulatory hurdles and safeguards, some believe Chinese automakers could find success expanding into the US market in the same way as Japan. toyota motor And South Korea Hyundai Motor I finish.
These automakers entered the American market with affordable and accessible vehicles, then increased their offerings to enhance quality and safety and eventually expanded into higher-end models.
“Japanese automakers came to the United States in the 1970s,” Stellantis’ Tavares said. “It took them 50 years to get to the top of the market with some competitors we know well. I don’t see any reason why that couldn’t happen with the Chinese.”
— CNBC Michael Bloom Contribute to this article.