China's electric car drive, led by BYD, leaves global brands behind

China’s electric vehicle market dominates leaving global brands trailing behind

China is taking the lead in the automotive industry’s transition to electric vehicles, leaving traditional global brands trailing behind. The Chinese auto market, the largest in the world, is rapidly moving towards an electric future. As a result, the upcoming Shanghai Auto Show, which kicks off on Tuesday, will showcase a vastly different market from the one that existed in 2021 when the pandemic had hit hard. One of the most significant changes is that Chinese-made brands now dominate key segments, thanks to new electric-drive models that are gaining popularity both domestically and internationally. As a result, established global brands find themselves struggling to keep up with China’s rapidly developing electric vehicle market.

China's electric car drive, led by BYD, leaves global brands behind
Image credits- MSN

Chinese automakers’ success can be attributed to their early investment in electric vehicle technology, as well as government policies that support the adoption of these vehicles. As a result, China’s EV market has grown at an impressive rate, with the country’s government aiming for electric cars to account for 20% of total new car sales by 2025. The global auto industry is now looking at China as a bellwether for the future of electric vehicles, with many international automakers shifting their focus toward the Chinese market. In the meantime, China’s local automakers continue to lead the way, leaving established global brands stuck in the slow lane.

EV sales

The Shanghai auto show will see the introduction of two new electric vehicles from Chinese automaker BYD, which has been the biggest beneficiary of China’s shift towards EVs. The company’s sales in China have surged by nearly 69% this year, enabling it to capture an 11% share of the overall car market, which is higher than the Volkswagen brand or the Toyota brand, according to sales data. Bill Russo, the founder of consultancy Automobility, has noted that the market is increasingly stratifying into clear winners and losers, with only a few winners emerging from the shift to EVs in China.

According to the China Passenger Car Association, sales of passenger cars in China fell by 13% in Q1 of this year. However, sales of EVs and plug-in hybrids, a market that is now dominated by Chinese automakers like BYD, increased by 22%. This has resulted in a double blow to established global brands like Volkswagen, General Motors, Honda, and Nissan, as both sales and market share have decreased. To make matters worse, a price war among more than 40 auto brands, including Tesla, has supported the sales of EVs and PHEVs, also known as “new energy vehicles” in China. Analysts suggest that this price war has cut into industry-wide profitability.

China’s passenger cars Market

China’s entry-level market for passenger cars has long been dominated by gasoline-only vehicles made by global automakers in partnership with Chinese brands. However, the trend is shifting in favor of electric vehicles (EVs) and plug-in hybrids, leaving combustion-engine cars in the dust. In the first quarter of this year, sales of gasoline-only vehicles priced between $22,500 and $30,000 fell by 20.5%, while EVs and plug-in hybrids increased by 68%. BYD, one of China’s leading automakers, is leading the charge in this market. Its Song plug-in hybrid SUV outsold the Nissan Sylphy, China’s top-selling car for three straight years, while its Dolphin EV surpassed the Volkswagen Passat. With the cost pressure on EVs from battery materials, the entry-level market is expected to be the last stronghold for gasoline-only vehicles in China, according to Xu Haidong, deputy chief engineer at the China Association of Automobile Manufacturers.

Meanwhile, in China’s premium market, with prices between $52,500 and $60,000, electric-drive cars are already the best sellers. BYD has emerged as the dominant player in China’s market for plug-in hybrids, with plug-ins accounting for more than half of its sales this year, allowing the company to compete on price across its line-up, according to analysts.