Automotive News Europe — 2025-04-17
Automotive Industry
Private car ownership in China was unheard of before Volkswagen Group launched local output in 1985.
Over the next 20 years, every major global automaker followed Volkswagen and opened assembly plants in the country.
Foreign carmakers, hindered from exporting to China by 15 percent tariffs, were forced to build locally while tethered to domestic partners, often smaller, state-affiliated automakers, while the government and investors nurtured electric vehicle startups with incentives.
Global brands, led by Buick, Volkswagen and Germany’s luxury marques, quickly came to dominate the Chinese market. In 2020, they accounted for 62 percent of light-vehicle shipments industrywide, according to the China Association of Automobile Manufacturers.
But in less than five years, the landscape in the world’s biggest new-car market has flipped. In 2024, 65 percent of the market was captured by Chinese brands.
As Automotive News marks its 100th anniversary in 2025, the paper is looking at key developments shaping the auto industry. China, once a provincial market, is very much a center of all R&D, planning and sourcing across the industry today.
Behind the radically upended Chinese market has been the rise of electrified vehicles that the country’s young automakers and upstarts have proved more adept at developing and producing than the global industry’s legacy carmakers.
Many of those EVs are now targeted at overseas markets, placing China, the world’s No. 2 economy, at ground zero in the latest geopolitical trade wars unleashed by U.S. President Donald Trump.
Nascent years
Throughout 2025, we will honor our legacy by connecting topics of today with our historical coverage as we look ahead to the next 100 years.
There are multiple reasons why foreign automakers lorded over local rivals in China for the first 35 years after Beijing opened up the domestic market.
When General Motors, Ford Motor Co., Toyota Motor Corp., Nissan Motor Co. and Hyundai Motor Co. piled into the market around 2000, armed with licenses granted via joint ventures with Chinese automakers, their local peers were still very young. Chery and Geely, China’s first two domestic brands, didn’t exist until 1997, and their first models were often mere copycats of Western models.
To survive at home, Chinese brands chose to avoid direct competition with global giants by marketing inexpensive compact and subcompact models in inland regions where consumers could not afford pricey foreign brands.
Turning point
With Beijing eager to break foreign automakers’ dominance in the domestic market, the State Council, China’s cabinet, received a letter in 2000 from Wan Gang, a Chinese national who had worked as an Audi engineer in Germany for nine years.
In his letter, detailed on the State Council’s website recognizing his contribution to electrified vehicles, Wan proposed Chinese automakers had a chance to leapfrog foreign rivals at home by developing and refining EVs and hybrids.
Wan was hired in 2000 by China’s Ministry of Technology as chief scientist of a state-backed research project for electrified vehicles. In 2007, he was elevated to minister, according to the State Council.
With Wan as a master planner, Beijing started doling out generous subsidies in 2009 to encourage the purchase of domestically produced EVs and plug-in hybrids.
The incentive program, rolled out as a pilot project in 14 major cities, was expanded across the country over the next few years.
Unexpected
Wan retired from the ministry in 2018 but stayed on as vice chairman of The Chinese People’s Political Consultative Conference, a top advisory group to the central government.
In a 2023 interview with China Central Television Station, he recalled his projection in 2000: China would need about 20 years to achieve large-scale commercialization of electrified vehicles.
The prediction proved dead-on. From 2000 to 2020, the share of electrified vehicles — mainly EVs and PHEVs — gradually increased to 5.4 percent of overall vehicle shipments.
But “the uptick since 2021 was beyond my expectation,” Wan told the state-run TV station.
In 2021, electrified vehicles made up 13.4 percent of shipments industrywide, a jump of 8 percentage points from a year earlier. The share approached 41 percent in 2024, according to the China Association of Automobile Manufacturers, and continues to grow this year.
The accelerated market penetration of electrified vehicles reflects a surge in private buyers, replacing government-backed entities such as bus and taxi operators, as the primary driver of demand, Wan said in the interview.
Geely’s first model, a gasoline-powered hatchback with front styling similar to a Mercedes-Benz sedan, rolled off the production line at the company’s plant in Zhejiang province in August 1998.
The rapid rise of the electrified vehicle market also came as a delightful surprise to Wang Chuanfu, founder and chairman of BYD Co., China’s largest electrified vehicle marker with roots as a battery maker in the 1990s.
BYD rolled out a slew of new electric and PHEV models from 2010 to 2019, but demand remained subdued, Wang recalled at an August 2023 event at the company’s Shenzhen headquarters, marking output of its 5 millionth electrified vehicle — a compact electric crossover.
“2019 was the most difficult year for BYD, and at that time, BYD had only one goal, which was to survive,” he recalled at the time.
“Fortunately, the ‘spring’ finally arrived,” he said. In mid-2020, BYD’s sales started to accelerate. The company sold roughly 594,000 EVs and PHEVs globally in 2021, a jump of 232 percent.
Foreign brands and automakers, including Tesla Inc., a relative newcomer, have been losing share in China since 2021 and many, such as Acura, Suzuki and Fiat, have been forced out of the market. Among the hardest hit was Mitsubishi Motors.
The Japanese company announced plans in October 2023 to end all vehicle production in China.
“The shift to electric vehicles is accelerating faster than expected, and consumers are rapidly undergoing significant changes in their brand and segment choices,” Mitsubishi Motors said at the time. “We tried to recover sales volume by releasing a new model in December 2022, but we continued to fall short of our plan.”
No automaker has been immune. GM and Volkswagen Group, two of the biggest foreign automakers in China, are racing to introduce smart electrified vehicles to salvage huge manufacturing footprints in the market.
Chinese advantages
Even Tesla, after unbridled growth in China, is feeling heat.
In a 2011 Bloomberg interview, Tesla CEO Elon Musk dismissed BYD’s EVs ― describing them as “not particularly attractive” and “not very strong” in technology. By January 2024, Musk had made a U-turn when commenting not only on BYD, but Chinese EV makers in general.
They are “the most competitive” worldwide, he told analysts on Tesla’s 2024 earnings call. “Frankly, if there are not trade barriers established, they will pretty much demolish most other companies in the world,” he added.
AlixPartners, a U.S. consultant, in July released key findings on why Chinese EV companies have quickly captured share at home.
Leading Chinese EV makers develop new models in just 20 months, AlixPartners found. As a result, China EVs are two to three years fresher than foreign brands, and new models adopt the latest intelligent driving and battery technologies at a faster rate.
Leading Chinese EV brands also boast a 35 percent cost advantage over global rivals that produce locally, reflecting lower labor outlays and higher vertical integration throughout the value chain.
In addition, many Chinese EV makers use direct-to-consumer models and tap diverse marketing channels to improve sales-lead conversion and customer engagement.
The competitive advantages continue to show up in sales charts.
Sales at Chery Automobile Co., a major Chinese automaker, jumped 38 percent to 2.6 million in 2024, with deliveries of electrified vehicles rallying 233 percent to exceed 583,000.
In November, Chery arranged for journalists to visit its newly opened assembly plant in the southwest China city of Fuzhou. Chery Vice President Li Xueyong, at a media roundtable following the plant tour, cited several competitive advantages enjoyed by many Chinese automakers.
China is maintaining a clear lead in technology, especially in batteries, electric motors and related control systems, he said. “It is fair to say Chinese companies’ plug-in hybrid technology is also at the forefront worldwide,” Li added.
China EV makers have also built a robust, all-encompassing and highly cost-effective supply chain that responds to customer needs, Li said. And they have adopted the expertise and capabilities of domestic consumer electronics and Internet companies in developing intelligent products and utilizing online marketing.
Chinese automakers are also more adept at reacting to changes in consumer demand than foreign automakers operating in the country.
“We know more about our customers in our home market, so we have moved faster to meet their needs in areas like vehicle connectivity and comfort,” Li said.
Global ambitions
China overtook Japan in 2023 as the world’s largest vehicle exporter. It solidified that position last year, with exports rising 19 percent to nearly 5.9 million, according to the China Association of Automobile Manufacturers.
Chery has remained China’s largest vehicle exporter for 22 straight years, with overseas shipments advancing 21 percent to top 1.1 million in 2024.
The surge in exports has put major economies on notice.
To curb China’s EV exports, the European Union, citing subsidies and other unfair advantages, in October slapped additional tariffs of up to 35.3 percent on EVs from China.
The impact of the EU’s tariffs is already being mitigated ― Chery started building vehicles in Spain in November at a factory jointly operated with local partner Ebro-EV Motors, while BYD is constructing EV plants in Hungary and Turkey.
While the Biden administration hiked tariffs on China-made EVs to 100 percent in September, some Chinese EV brands still harbor hope of entering the U.S. market.
While analysts believe some Chinese EV makers aim to export vehicles from Southeast Asia, where they are ramping up production, Trump has targeted Vietnam and Thailand, major auto hubs, with new U.S. tariffs.
Trump, as recently as the Republican National Convention in Milwaukee in July, expressed openness to Chinese automakers, as long as they build U.S. factories and hire locals to run the facilities.
Even if they cannot sell in the U.S., Chinese automakers are poised to gain share at home and abroad. With overseas sales seen doubling to 800,000, BYD expects to sell 5 million to 6 million vehicles globally this year — enough to surpass Ford Motor Co.
AlixPartners predicted in July that Chinese brands, backed by competitive electrified products, will boost their domestic market share to 70 percent by 2030, with market share in Europe doubling to 12 percent from an estimated 6 percent in 2024.
“Mature automakers must find a way to be competitive against Chinese counterparts, or they will cede the volume EV market to Chinese brands, much like how U.S. automakers lost the domestic small-car market to Japanese automakers in the ’80s,” Stephen Dyer, partner and head of the Asia Automotive and Industrials Practice at AlixPartners, warned. “Traditional brands who fail to get out of their business-as-usual mindset are in danger of being disrupted by inexpensive ‘good enough’ products.”