Tesla has emerged as a major exporter from its Shanghai factory since last year.
In the first nine months of this year, approximately 165,000 vehicles were shipped from the factory to the international market.
Other global automakers, including Renault and BMW, are also exporting Chinese-made EVs, and the Volkswagen Group plans to start exporting them next year.
Chinese domestic brands make up the balance. SAIC’s EV exports in his first three quarters saw him surge to 78,000 vehicles, most of them under his 2007 acquisition of the MG brand.
Rival BYD has exported 22,000 vehicles and plans to export even more in 2023 as it continues to enter new markets. Companies such as Xpeng, Nio and Great Wall have also announced major expansion plans.
It’s all starting to show up in EV sales figures in other countries. Chinese automakers accounted for 11% of his 1.8 million EVs sold in Europe in his first three quarters of the year, up from his 2% in 2020.
It’s worth taking a moment to think about how you got here. Over the past decade, there has been a heated debate over whether Chinese automakers can establish themselves on the world stage. When Chinese automakers didn’t dominate their home market, the story felt a little abstract.
In 2015, 66% of all car sales in China came from joint ventures between international and domestic brands. Entering Germany or America seemed like a pretty big leap.
EVs are changing all that. While many Western brands have hobbled and struggled for years with stringent fuel economy regulations, China has been pushing ahead through government vehicle purchase requirements, subsidies, supply-side incentives and massive investments in charging infrastructure. We were building the EV industry.
Nearly 60% of global EV sales are now sold in China. The company’s share in the battery supply chain is even higher.
So far, many of China’s EV exports are positioned at the high end of the market, but that could change. Established Western automakers are increasingly trying to move into the luxury market to sell more luxury cars. Some companies are exiting the passenger car segment entirely to focus on higher-margin SUVs and trucks.
This move into the upscale market may make sense from a profit margin standpoint, but it’s opening up a huge gap in the lower end of the spectrum that Chinese automakers might try to fill.
China’s price advantage here is real. Battery pack prices were 33% higher than in China in Europe and 24% higher in the US, according to a recently released lithium-ion battery price study by BNEF.
The average price of a battery electric vehicle in China in 2021 will be $26,500, less than two-thirds of the average EV transaction price in Europe and less than half that of the United States.
Over the past decade, legacy automakers have refrained from ramping up and owning the market as soon as there is real demand for EVs.
That’s not what happens in the world’s largest car market. Plug-in vehicles now account for nearly 30% of sales in China. With the exception of Tesla, international automakers have a tiny fraction of their sales and are increasingly being squeezed out.
Established automakers now commonly vow to vie for second place in EVs behind Tesla, or surpass it in the next decade.
Still, you can see that there is a huge BYD-style blind spot in their field of view. BYD is on pace to sell nearly 2 million plug-in vehicles this year, and by 2023 he’s targeting over 3 million.
None of this means that the road ahead is not easy for Chinese brands internationally. Gaining consumer trust, brand awareness and market share takes time, and building quality vehicles remains difficult. Still, research has shown that consumers who drive EVs really like his EVs, and the market has a way of getting what people want. The latest export data suggests they are already doing that.
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