Shulou(Shulou.com)11/24 Report--

China's car exports have risen sharply this year as domestic automakers seek to gain a foothold in foreign markets, according to news from December 18. By the end of September, China had exported 2.2 million passenger cars, trucks, buses and other vehicles, an increase of 54 per cent over the same period last year and more than double the annual average from 2012 to 2020.

Tuyuan Pixabay of which electric vehicles have become the biggest contributor to the growth of China's vehicle exports. In the first three quarters of this year, China exported 342000 passenger electric vehicles, accounting for 29 per cent of all exported passenger vehicles, up from 2 per cent in 2019. In the same period, another 314000 low-speed electric vehicles and 4000 electric buses were exported abroad.

The surge in China's electric vehicle exports is mainly driven by the following factors:

First, China dominates the supply of batteries and materials for electric vehicles, which helps boost production in the domestic car market. As interest in electric vehicle technology grows, foreign carmakers are taking advantage of China's low production costs and mature supply chains to mass produce electric vehicles for global customers.

Second, since last year, Tesla has used the Shanghai factory to mass produce electric cars and has become a major exporter. In the first nine months of this year, the company shipped nearly 165000 cars to the international market through its Shanghai plant. Other multinational carmakers, including Renault and BMW, are also exporting domestically made electric cars, which Volkswagen will start exporting next year.

Third, China's local electric vehicle brands are rising rapidly. SAIC's exports of electric vehicles jumped to 78000 in the first three quarters of this year, mainly the MG brand acquired in 2007. BYD has exported 22000 electric vehicles and plans to increase sales in 2023 as it continues to enter new markets. In addition, companies such as Xiaopeng, Weilai and Great Wall have also announced large-scale expansion plans.

The growth trend of China's electric vehicle exports is also beginning to show up in the electric vehicle sales data of other countries. In the first three quarters of this year, 11 per cent of the 1.8 million electric vehicles sold in Europe came from Chinese carmakers, up from 2 per cent in 2020.

For most of the past decade, there has been a heated discussion about whether Chinese carmakers can gain a foothold on the global stage. In 2015, 66% of China's car sales came from joint ventures of multinational and domestic brands, and being able to enter the German or American market is seen as a huge leap forward.

But electric cars are changing all that. While many foreign brands have dragged their feet and opposed stricter fuel economy regulations for years, China is building its electric car industry through government fleet procurement, subsidies, supply-side incentives and extensive investment in charging pile infrastructure. China now accounts for nearly 60 per cent of global electric vehicle sales and accounts for a higher share of the battery supply chain.

So far, most of China's exports of electric cars are at the high end of the market, but that could change. Established foreign carmakers are increasingly trying to move upmarket to sell more high-end cars. Some companies are pulling out of some markets altogether to focus on higher-margin SUV and trucks.

This shift to the high end of the market may be reasonable from a profit margin perspective, but it leaves a considerable gap at the lower end of the market that Chinese carmakers may try to fill. China has a very obvious price advantage in this area.

According to a recent lithium-ion battery price survey released by Bloomberg New Energy Finance (BNEF), the price of battery packs in Europe is 33% higher than that in China and 24% higher in the United States. In 2021, the average selling price of electric vehicles with domestic batteries was $26500, less than 2/3 of the average price of electric vehicles in Europe and less than half of the average price of electric vehicles in the United States.

Over the past decade, traditional carmakers have firmly believed that as long as there is real demand for electric cars, they will rapidly expand production and occupy the market. But this is not the case in China, the world's largest car market. Today, plug-in hybrids account for nearly 30% of China's car sales. Excluding Tesla, multinational carmakers account for only a small portion of these sales and are increasingly being squeezed out.

Established carmakers are now generally talking about how to compete for the position of "second-largest electric car maker" after Tesla, or how to overtake Tesla in the next decade. This means that there is a huge blind spot in their vision, ignoring BYD. BYD aims to sell nearly 2 million plug-in hybrid vehicles this year and more than 3 million in 2023. This far exceeds what Volkswagen is likely to achieve this year.

Of course, all these developments do not mean that it will be smooth for Chinese car brands to enter the international market. It takes time to gain consumer trust, increase brand awareness and market share, and it is still difficult to build high-quality cars. Still, a large number of studies have shown that consumers who drive electric cars really like them. And the latest export figures show that Chinese carmakers are already trying to meet their needs.

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