BYD Seagull small electric vehicle was exhibited at the 20th Shanghai International Automobile Industry Exhibition held at the National Exhibition and Convention Center (Shanghai).
Video Visual China Group | Getty Images
DETROIT — Chinese automakers pose a growing threat to U.S. automakers even though they don’t sell directly to consumers in the U.S. market.
Sales of Chinese-made cars are increasing at a remarkable pace in Asia, Europe, and other countries outside these continents. China recently reported that it will export more than 5 million cars in 2023, overtaking Japan to become the world’s top car exporter.
China has jumped from 6th place to the top seed since 2020, thanks to a large number of entries from established government companies such as SAIC and Dongfeng, as well as emerging companies such as BYD and Nio. This comes as U.S. auto exports decline.companies such as general motors Reduced international operations. According to the U.S. Bureau of Economic Analysis, U.S. auto exports in 2022, the latest available data, were down 25% from their 2016 peak.
According to global consulting firm Alix Partners, the United States, which was the world’s fourth-largest car exporter before 2020, was ranked sixth in the world last year, followed by Mexico in fifth, South Korea in fourth, and third. It was not as good as Germany.
“My biggest competition is the Chinese automakers,” said Carlos Tavares, CEO of Chrysler’s parent company. Stellantis, during Friday’s virtual media roundtable. “This is going to be a big battle. For a global automaker like Stellantis, which operates all over the world, there is no choice but to go head-to-head with Chinese automakers. There is no other way. ”
The threat extends beyond export volumes. Chinese automakers have set new standards in vehicle production and pricing. They are releasing new models in record time, and many companies are producing EVs efficiently and profitably, which is why global automakers, including US GM and GM This is something that has not been achieved. ford motor.
BYD advantage
Auto experts point out that BYD Co., Ltd. This is a prime example of the rise of Chinese automakers. The company rose to the top last year with support from the Beijing government. tesla Become the world’s largest EV selling country.
Elon Musk, CEO of Tesla Inc., which operates a large factory in China, said the Chinese automaker is his biggest competitor based in Texas.
“Many people think that the top 10 car companies will be Tesla, followed by nine Chinese car companies. I think they’re right,” Musk said. New York Times Deal Book Conference in November.
According to The Economist, Rhodium Group estimates that BYD received about $4.3 billion in state aid between 2015 and 2020. The Chinese government also offers subsidies to encourage buyers of electric cars.
Stellantis CEO Carlos Tavares holds a press conference after meeting with labor unions on March 31, 2022 in Turin, Italy.
Massimo Pinka | Reuters
BYD has cracked the code for low-cost EVs that seemingly cross borders. The company’s BYD Seagull is a small EV that starts at about $11,400, which would significantly undercut the U.S. EV price at less than $15,000, even after taking into account the U.S.’s 27.5% tariff on Chinese products. vehicle.
“This is a car that scares me,” Kristin Dziczek, an auto policy adviser at the Federal Reserve Bank of Chicago’s Detroit branch, said at the organization’s Automotive Insights Symposium last week. “How can we cut the price of EVs in half? China is already doing it.”
Mathew Vachaparampil, CEO of car teardown and consulting firm Caresoft Global, estimates BYD earns $1,500 in profit for each Seagull sold. In the worst case scenario, the company will break even, he said.
And the company is increasing vehicle shipments outside China. Bernstein said overseas markets accounted for about 10% of BYD’s more than 3 million units sold last year, and that share has doubled since the beginning of the year.
“BYD has an unparalleled cost structure and product innovation capabilities that stem from its high degree of vertical integration, which allows the company to “This will enable growth in the ongoing EV race in China and abroad.” . “Despite increased pricing pressure in China, we expect to support 29% as we focus on overseas and premium segments.” [compound annual growth rate] Revenues are expected until 2025. ”
Growth is global
With support from local and federal governments, Chinese automakers’ growth began in their home country, taking share from forced joint ventures between non-domestic automakers and Chinese companies.
For example, GM’s share of the Chinese market, including joint ventures, is has plummeted from about 15% in 2015 to 8.6% at the end of last year’s third quarter.
“What is happening inside China? [new energy vehicle] “Brands have become dominant, at 26%,” Mark Wakefield, global co-leader of AlixPartners’ automotive and industrial practice, said at the Chicago Fed’s Automotive Conference. [market share] A few years ago, it was expected to reach more than 50% by 2022 and 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 Chen
And that growth is not limited to Japan. Wakefield said Chinese companies are starting to expand into countries such as Mexico and Europe. The company has done this primarily through relatively inexpensive models that U.S. automakers have discontinued and EVs, which experts see as an open market for the company.
According to the European Union, as of September last year, Chinese companies accounted for 8% of all-electric vehicle sales in Europe, and their share could rise to 15% by 2025. The EU believes that Chinese EVs are undercutting local models by about 20% on the European market.
The influx of Chinese EVs has prompted the European Union to begin providing government support to the industry.
In Mexico, Chinese-made vehicles with internal combustion engines have increased from 0% to 20% of the country’s light car sales over the past six years, said Mr. Zicek of the Chicago Fed.
“Mexico is the second largest market for Chinese cars after Russia,” he said. “They’ll be coming to the coast of Mexico in the not-too-distant future.”
come to america
Chinese car companies have said for decades that they would start selling cars in the United States under their own brands, but nothing has been successful.
That doesn’t mean China isn’t competing in the U.S. market. Apart from major supply chain relationships, there are also several car brands owned by Chinese companies with operations in the US, including Lotus, Volvo (including the Polestar spin-off), and niche EV maker Karma.
American companies such as GM and Ford plan to manufacture some vehicles in China and import and sell them in the United States. GM imports the Buick Envision from China to the United States, and Ford announced last year that it would import the upcoming Buick Envision. A Lincoln-Nautilus crossover made in China.
But for now, American drivers cannot easily buy Dongfeng, BYD and other Chinese-made vehicles in the United States.
2024 Lincoln Nautilus
ford
Some believe that, barring potential regulatory hurdles and protectionist actions, Chinese automakers could be just as successful in expanding into the U.S. market as Japanese automakers. toyota motors and korean hyundai car I’ve done it.
These automakers entered the U.S. market with affordable and easily available vehicles, then increased their offerings to improve quality and safety, and eventually expanded into high-end models.
“Japanese automakers came to the U.S. in the ’70s,” said Stellantis’ Tavares. “Among the competitors we know well, it took them 50 years to get to the top of the market. We see no reason why this can’t happen with the Chinese.”
— CNBC michael bloom Contributed to this article.