China's electric vehicle (EV) industry is aggressively pushing into overseas markets, navigating trade barriers from Europe and the US designed to stall its progress. However, these obstacles are only temporarily hindering China's EV exports while accelerating the relocation of its global supply chain.
A survey by European management consultancy AlixPartners reveals that the trade war is spurring Chinese EV manufacturers to hasten the construction of overseas factories. By 2030, Chinese brand cars are projected to command a 33% share of the global market, with overseas sales reaching approximately 9 million units.
Once Chinese factories abroad are operational, tariffs will lose their impact. By 2030, Chinese brands' market share in Europe is expected to double to 12%, rise twofold to 28% in Central and South America, and hit 39% in the Middle East and Africa. In South Asia and Southeast Asia, the market share is anticipated to jump from 3% in 2024 to 30%.
Impact on Global Automotive Market
Supply chain insiders note that the annual total sales of major manufacturers like Toyota and Volkswagen are around 10 million units each. Chinese brands, focusing on new energy vehicles—including pure electric and plug-in hybrid cars—will adapt their product mixes to regional demands. Leading exporter SAIC MG also includes ICEs in its lineup.
The international expansion of Chinese brands is expected to encroach on the market share of mainstream car manufacturers from Europe, the US, Japan, and South Korea, as evidenced by Tesla's performance in the global market. With numerous Chinese brands effectively penetrating the global market, the market share of traditional manufacturers in China has been declining.
Trade Barriers and Industry Response
The effectiveness of using trade barriers to block Chinese brands is questionable. Many industries, such as the solar sector where Chinese manufacturers hold over 80% of the global market, have shown similar trends. Chinese solar companies have responded to trade wars by setting up factories in Southeast Asia.
In response to the dominance of Chinese solar companies, Europe has abandoned imposing tariffs, as self-production efforts proved ineffective and led to retaliatory actions from China. The US, however, continues its efforts. Geopolitical developments often bring unexpected changes, such as Turkey and Canada joining the EU in imposing tariffs on Chinese EVs.
Global Manufacturing Strategies
Europe has already implemented anti-dumping provisional duties on Chinese EVs, prompting Chinese companies like SAIC MG, Geely, Chery, and Leapmotor to establish factories in Europe. BYD and Great Wall Motors are also planning to manufacture in Brazil and Europe.
In 2023, adjustments to the US Inflation Reduction Act (IRA) regulations included measures on "foreign entities of concern" set for 2024. Recently, the US increased the tariff on Chinese EVs from 25% to 100%. Although companies like BYD, Chery, and Great Wall Motors plan to produce vehicles in Mexico to supply the US market, the US is closely monitoring and threatening to resist any circumvention of tariffs.
As China's EV sector continues its rapid global expansion, it remains to be seen how effectively international trade barriers can throttle this momentum.
