Competition in China’s domestic new energy vehicle market is intense, so many auto companies are accelerating their expansion plans to overseas markets.
In comparison, the competitive landscape in overseas markets is generally lower than that in China’s domestic new energy vehicle market. In addition, Chinese auto company new energy vehicles have excellent product performance and have more opportunities to set competitive prices, thereby achieving a large profit margin.
In 2021, China’s auto exports began to grow significantly, exporting 2 million vehicles, up 101% year-on-year. In 2022, as the market penetration rate of China’s new energy vehicles continued to accelerate, so did exports, which estimated to 3.11 million vehicles in 2022, up 55% year-on-year. In the first quarter of 2023, China exported 990,000 vehicles, becoming the world’s largest auto exporter.
Since the beginning of 2023, based on the low base in the first half of 2022, China’s new energy vehicle passenger vehicle exports increased significantly. Fom January to May this year, China’s cumulative exports of new energy passenger vehicles reached 406,000, up 162.1% year-on-year.
Demand from the European new energy vehicle industry is growing rapidly, which is an important driving force for the global new energy vehicle market. Therefore, Europe has become the first stop for China’s EV auto companies to go overseas. For example, in the European Norwegian market, NIO and XPeng have already delivered models.
Therefore, while China’s leading EV auto companies are grabbing up the local Chinese market, they are also actively developing in overseas markets. Compared with companies occupying China’s low-end car market, this is also the advantage of Weilai, XPeng and Li Auto. Higher-end products will complement higher product capabilities and jointly provide profit margins for exports.
In the short to medium term, Chinese auto companies will use their own domestic production capacity to export vehicles overseas. However, local supply to the automotive industry also has strong economic benefits (IRA). Therefore, from the mid to long-term perspective, it is foreseeable that Chinese auto companies will rely on their own local advantages and learn from Tesla’s strategy of setting up factories around the world to increase their overseas market share.