The Chinese automotive industry has seen significant developments and transformations over the years. While the period from 1949 to 1980 witnessed slow progress in the industry due to restricted competition and political instability during the social revolution era, the landscape shifted during the reform and opening-up period. Foreign investment and joint ventures played a crucial role in attracting foreign technology and capital into China. American Motors Corporation (AMC) and Volkswagen were among the early entrants, signing long-term contracts to produce vehicles in China. This led to the gradual localization of automotive components, and the strengthening of key local players such as SAIC, FAW, Dongfeng and Changan, collectively known as the "Big Four". The entry of China into the World Trade Organization (WTO) in 2001 further accelerated the growth of the automotive industry. Tariff reductions and increased competition led to a surge in car sales, with China becoming the largest auto producer globally since 2008.
In the 2020s, the automotive industry in China has experienced a rise in market dominance by domestic manufacturers, with a growing focus on areas such as electric vehicle technology and advanced assisted driving systems. The maturation of technology and supply chains has also led foreign carmakers to seek partnerships with Chinese manufacturers. However, the industry also faced heightened scrutiny and restrictions from Western countries, partly due to the China–United States trade war.
Since 2009, annual production of automobiles in China accounted for more than 32% of worldwide vehicle production, exceeding both that of the European Union and that of the United States and Japan combined.[3] Although the majority of vehicles produced in China are sold domestically, exports reached 3.11 million units in 2022, accounting for 11.5% of total production. This makes the country the world's second-largest car exporter.[4] In 2023, China overtook Japan and became the world largest car exporter.[5]
Automobile manufacturers in China mainly consists of local manufacturers and Sino-foreign joint ventures. Since 2018, the Chinese government began allowing foreign manufacturers to produce cars without forming joint venture with a local partner. The main industry group for the Chinese automotive industry is the China Association of Automobile Manufacturers (CAAM, Chinese: 中国汽车工业协会).
Chinese major automobile manufacturers headquarter locations
Before 2010, the traditional "Big Four" refers to the four major state-owned car manufacturers, SAIC, FAW, Dongfeng and Changan. Other Chinese car manufacturers, both from public and private sectors, like Geely, BAIC, BYD, Chery, GAC, Great Wall, JAC and Seres emerged as the major players with the expansion of Chinese automotive industry.
Central government controlled state-owned manufacturers
FAW (ChinaFirst Automobile Works Group Corporation, Chinese: 中国第一汽车集团有限公司) is a Chinese state-owned automotive manufacturing company headquartered in Changchun which is directly under the control of Central Government of China. Founded the 15th July 1953, It is the oldest car manufacturer of the People's Republic of China. Currently FAW sells products under there different brands including Hongqi, Jiefang, and Bestune. FAW also operates joint ventures with Toyota, Volkswagen and Audi.
Dongfeng (Dongfeng Motor Corporation, Chinese: 东风汽车集团有限公司) is a Chinese state-owned automobile manufacturer headquartered in Wuhan, Hubei, which is directly under the control of Central Government of China. Originally known as Second Automobile Works when it was founded in 1969, FAW and SAW were the two major manufacturers before the Reform and Opening-up of China. It current owns Voyah, M-Hero, Aeolus, Forthing, Dongfeng Nammi and operates joint ventures including Cummins, Honda, Nissan, Infiniti, and Stellantis (PSA Peugeot Citroën).
Changan (Chang'an Automobile Group, Chinese: 重庆长安汽车股份有限公司) is an automobile manufacturer headquartered in Chongqing, and is a state-owned enterprise controlled by China South Industries Group Corporation, an enterprise under the control of Central Government. It is the oldest automobile manufacturer in China which can be traced back to 1862 of Qing Dynasty. Changan designs, develops, manufactures and sells passenger cars sold under the Changan Auto, Deepal and Kaicene brand. Changan operates joint venture companies include Avatr, Ford and Mazda.
Local government controlled state-owned manufacturers
SAIC (Shanghai Automotive Industry Corporation, Chinese:上海汽车集团股份有限公司) is a Chinese state-owned automotive manufacturing company headquartered in Shanghai. It is controlled by the Municipal Government of Shanghai City. SAIC sells vehicles under a variety of brands including IM, Rising Auto, Maxus, MG, Roewe, Wuling, Baojun, Yuejin. Joint venture brands include Buick, Chevrolet, Iveco, Škoda, Volkswagen.
GAC (Guangzhou Automobile Corporation, Chinese: 广州汽车集团股份有限公司), is a Chinese state-owned automobile manufacturer headquartered in Guangzhou and controlled by the Provincial Government of Guangdong Province. GAC sells passenger cars under the Trumpchi and Aion brand operates foreign joint venture with Honda and Toyota.
JAC (Anhui Jianghuai Automobile Group Corporation, Chinese: 安徽江淮汽车集团股份有限公司) is a state-owned enterprise based in Hefei, Anhui Province and controlled by the Provincial Government of Anhui. It owns the brands of JAC, JAC EV, Sehol.
Chery (Chery Automobile, Chinese: 奇瑞汽车股份有限公司), a Chinese state-owned automobile manufacturer based in Anhui and controlled by the Municipal Government of Wuhu City. It sells cars under the Chery, Exeed, Jetour and iCar brand. It also has a foreign joint venture with Jaguar Land Rover for the production of Jaguar and Land Rover cars in China.
Privately owned manufacturers
BYD (BYD Auto, Chinese: 比亚迪汽车有限公司), is an automobile manufacturer based in Shenzhen, founded by BYD Company which are known for their batteries and electric buses. It is currently the largest plug-in electric vehicle manufacturer of the world. It operates brands such as BYD, Denza, Fangchengbao, and Yangwang.
Geely (Zhejiang Geely Holding Group, Chinese: 浙江吉利控股集团有限公司), is the one of the biggest privately owned automobile manufacturer headquartered in Taizhou, Zhejiang. Currently one of the fastest growing automotive groups in the world, Geely is known for its ownership of the Swedish luxury car brand Volvo Cars, its performance counterpart Polestar, and the British sports car company Lotus. In China, their passenger car brands include Geely, Livan, Lynk & Co, Zeekr, Volvo Cars, Polestar, Lotus, LEVC, Farizon, Radar, Ji Yue and operates joint ventures with Proton and Smart.
GWM (Great Wall Motor, Chinese: 长城汽车股份有限公司), private company famous for manufacturing SUVs headquartered in Baoding, Hebei. Great Wall sells vehicles under the brands of Haval, Wey, Tank and Ora. It operates a joint venture called Spotlight Automotive with BMW Group to produce Mini electric cars.
Seres (Seres Group, Chinese: 赛力斯集团股份有限公司), is a private manufacturer headquartered in Chongqing. It used to be famous for producing light commercial vehicles and budget passenger vehicles. Partnering with Chinese tech giant Huawei, Seres is transforming to produce premium electric vehicle since 2021. It owns the brands of Seres, AITO, Fengon and DFSK.
Li Auto (Beijing Car And Home Information Technology,Chinese: 北京车和家信息技术有限公司) is a startup manufacturer founded in 2015. It is specialized in developing and manufacturing premium range-extender electric vehicles and has rapidly grown into a major player in Chinese automobile market.
Nio (Shanghai Nio Automobile,Chinese: 上海蔚来汽车有限公司) is an EV startup manufacturer founded in 2014 and headquartered in Shanghai. The company is famous for its battery-swapping stations and premium EV.
Xpeng (Guangzhou Xiaopeng Motors Technology, Chinese: 广州小鹏汽车科技有限公司) is an EV startup manufacturer founded in 2014 and headquarter in Guangzhou. Together with Nio and Li Auto, it is one of the first EV companies in China. Volkswagen Group has invested and acquired 5% of stake of Xpeng since 2023.
Leapmotor (Zhejiang Leapmotor Technology, Chinese: 浙江零跑科技股份有限公司) is an EV manufacturer hounded in 2015, headquartered in Hangzhou. Stellantis has invested and acquired 20% of stake of Leapmotor since 2023.
Hozon (ZhejiangHozon Auto New Energy Automobile, Chinese: 浙江合众新能源汽车有限公司), is an EV manufacture headquarter in Hangzhou. It produces vehicles under the Neta brand.
Following the Reform and Opening-up era, from 1994 to 2018, Chinese automotive policy mandated that foreign carmakers had to establish joint ventures with a Chinese counterpart to produce vehicles in the country, with the Chinese partner owning at least 50% of the venture. This measure was implemented to protect local manufacturers and provide it with the chance to bridge the technology gap and develop their brands.[6]
On 10 April 2018, President Xi Jinping announced a "large-scale" relaxation of foreign investment restrictions in the automotive sector. Shortly after President Xi's announcement, the National Development and Reform Commission (NDRC) announced on 17 April 2018 that foreign ownership limits on automakers would be phased out over a 5-year transition period. On 28 July 2018, China lifted foreign ownership restrictions on new energy vehicle production, which benefited American electric car manufacturer Tesla, Inc. The company established a plant in Shanghai, becoming the first foreign automaker to open a wholly-owned manufacturing facility in China.[7][8]
The liberalization was followed by commercial vehicles in 2020 and passenger cars in 2022. The rule that prohibited foreign automakers from setting up more than two joint ventures in China was also lifted in 2022. Therefore, it became legally possible for the foreign automakers to buy out local partners from joint ventures. In 2022, BMW and Volkswagen had acquired 75% stake in their joint ventures, which enabled them to have the majority control of its Chinese joint ventures.[9][10]
The following are foreign manufacturers that operate in China either through wholly-owned manufacturing plants or joint ventures where they own more than 50 percent of the shares.
Tesla
Gigafactory Shanghai (Tesla currently is the only fully foreign owned car manufacturer in Chinese mainland)
However, the War of Resistance against Japanese Aggression of 1937 hampered the progress of the Chinese auto industry, as seen by the relocation of the Changan Automobile factory from Shanghai to Chongqing in the wake of the city's bombing and attack.[16] After the foundation of the People's Republic of China in 1949, plants and licensed auto design were established in China with assistance from the Soviet Union in the 1950s, marking the beginning of the country's rapidly expanding automobile sector. However, the Chinese automotive industry had small volumes for the first 30 years of the republic, not exceeding 100–200 thousand per year.
Since the early 1990s, the Chinese automotive industry has developed rapidly. China's annual automobile production capacity first exceeded one million in 1992. By 2000, China was producing over two million vehicles. After China's entry into the World Trade Organization (WTO) in 2001, the development of the automobile market accelerated further. Between 2002 and 2007, China's national automobile market grew by an average 21 percent, or one million vehicles year-on-year.[17] In 2009, China produced 13.79 million automobiles, of which 8 million were passenger cars and 3.41 million were commercial vehicles and surpassed the United States as the world's largest automobile producer by volume. In 2010, both sales and production topped 18 million units, with 13.76 million passenger cars delivered, in each case the largest by any nation in history.[18] In 2017, total vehicle production in China reached 28.879 million, accounting for 30.19% of global automotive production.[19] In the first half of 2023, China overtook Japan to become the world's largest exporter of automobiles, exporting 2.34 million vehicles compared to 2.02 million for Japan.[20]
As of at least 2024, China is the world's largest market both in terms of automobile sales and ownership.[21]: 105
Historic production data and notable milestones of Chinese automobile industry[22][23][24]
The first Chinese built motor vehicle was a truck called the Ming Sheng. It was designed by Daniel F Myers and a prototype was made at the Liao Ning Trench Mortar Arsenal, Shenyang. The prototype was completed on May 31, 1931, for Zhang Xueliang. Prior to production commencing, the factory was bombed by the invading Japanese and production never commenced.[27] A fellow general, Yang Hucheng, patronized the inventor Tang Zhongming to make a new type of automobile engine powered by charcoal. In 1932 Tang founded the Chung Ming Machinery Co. Ltd. in Shanghai to produce the engines. Charcoal powered vehicles were mainly used during the War of Resistance against Japanese Aggression in China because of fuel shortages.[28] Tung oil was also used during the war as a petroleum substitute.[29] One source states that Du Yuming designed a car in 1937, but did not make it until 1943 after having been forced to move because of the war. No further information has been found about it.[30]
The development of the Chinese automobile industry during this period was relatively slow due to the lack of free market competition and turbulence of socialist political movement like Culture Revolution. Except for a certain degree of development in the 1950s with assistance from the Soviet Union, the Chinese automobile industry remained closed and lagging behind until the period of Reform and Opening-up. Most domestically produced vehicles were primarily the Jiefang trucks for military or industrial department and the Hongqi sedans used by a limited number of government officials. The concept of private cars had not yet emerged in China during this period.
The first Chinese production vehicles were trucks made by the First Automobile Works in 1956, called the Jiefang CA-10.[31] This was followed on March 10, 1958, by the 2½ ton light duty truck (NJ130), which was based on the Russian GAZ-51, was produced in Nanjing. The truck was named Yuejin (meaning "leap forward") by China's First Ministry of Industrial Machinery.
In June 1958 the Nanjing Automobile Works, previously a vehicle servicing unit of the Army, was established. Production continued until the last truck (NJ134) rolled off the assembly line on July 9, 1987. Cumulative production was 161,988 units (including models NJ130, NJ230, NJ135 and NJ134). The first production automobiles were the Dongfeng CA71, Hongqi CA72, Feng Huang (later known as the Shanghai SH760) all from 1958.
The reform and opening-up and foreign investment (1980 to 2000)
Chinese economic reform in 1978 have brought opportunities for the development of the Chinese automotive industry.
Impact of foreign cars
The passenger car industry was a minor part of vehicle production during the first three decades of China's socialist economy. As late as 1985, the country produced a total of only 5,200 passenger cars. Car sales increased dramatically, although they were almost entirely purchased by danweis (work units – private car ownership was virtually unknown at the time).[32]
As domestic production was very limited, import totals rose dramatically, despite a 260 per cent import duty on foreign vehicles. Before 1984, the dominant exporter of cars to China had been the Soviet Union. In 1984, Japan's vehicle exports to China increased sevenfold (from 10,800 to 85,000) and by mid-1985 China had become Japan's second biggest export market after the U.S.[33] The country spent some $3 billion to import more than 350,000 vehicles (including 106,000 cars and 111,000 trucks) in 1985 alone. Three taxi companies in particular thirsted for Japanese cars, such as Toyota Crowns and Nissan Bluebirds.[34]
As this spending binge began to lead to a severe trade deficit, the Chinese leadership put on the brakes through the adjustment of import and foreign exchange policies.[35] Customs duties on imported goods were raised in March 1985 and a new "regulatory tax" was added a little later. In September 1985, a two-year moratorium on nearly all vehicle imports was imposed.[35]
Emergence of joint ventures and the "market for technology" policy
In July 1979, China adopted its first Law on Joint Venture Using Chinese and Foreign Investment. This law was effective in helping to attract and absorb foreign technology and capital from developed countries like the United States, facilitated China's exports to such countries, and thereby contributed to China's subsequent rapid economic growth.[36]
Jeep Cherokee, made by first joint venture of China, Beijing Jeep.
While limiting imports, China also tried to increase local production by boosting the various existing joint venture passenger car production agreements, as well as adding new ones. In 1983, American Motors Corporation (AMC, later acquired by Chrysler Corporation) signed a 20-year contract to produce their Jeep-model vehicles in Beijing. The following year, Germany's Volkswagen signed a 25-year contract to make passenger cars in Shanghai, and France's Peugeot agreed to another passenger car project to make vehicles in the prosperous southern city of Guangzhou.[34] These early joint ventures did not allow the Chinese to borrow much foreign technology, as knock-down kit assembly made up the majority of manufacturing activities;[37] tooling may not have been allowed to slip past borders.
Volkswagen Santana, made by SAIC-VW, once was the most popular family sedan from 1990s to 2010s.
The Five-Year Plan and progress in domestic supply chain
In April 1986, the "Seventh Five-Year Plan (1986-1990)" officially proposed: "To consider the automobile manufacturing industry as a crucial pillar industry." It had a profound and positive impact on the Chinese automotive industry by recognizing it as a key national pillar industry, driving rapid industry growth, fostering domestic market prosperity, enhancing international competitiveness, and promoting technological innovation and sustainable development.[38]
The Chinese automotive industry gradually moved away from the manual workshop model and embraced Western advanced technologies and quality control management. Over the course of a decade, through digestion and absorption, the localization rate of Chinese automotive components significantly increased. In 1997, the localization rate of the SAIC-VWSantana, one of the most popular sedan in China then, jumped from 60.09% six years prior to over 90%, with key components like the car body, engine, transmission, and front and rear axle assemblies all achieving localization. The localization rate of the FAW-VWAudi 100 reached 93%, while the Jetta achieved an 84.02%. The localization rate of the Citroën Fukang by FAW exceeded 80%. The improvement in the localization rate of complete vehicles was made possible by the emerging prowess of complementary enterprises in the industry chain. Renowned automotive components today, such as diesel engines from Yuchai Machinery Factory and automotive glass from Fuyao, had their beginnings during this period.[39]
Several enterprises entered the automobile industry since 1994. Some of them are originated from defense industry, such as Changan, Changhe, and Hafei; some were developed from old state-owned companies, such as BYD, Brilliance, Chery, and Changfeng. Others are private-owned companies, such as Geely and Great Wall Motors.
The explosive growth and expansion (2000 to 2020)
Entering the WTO
Geely Haoqin, first vehicle produced by Chinese private manufacturer Geely in 1998.
With China's accession to the WTO in 2001, automotive tariffs began to be substantially reduced, leading to a decrease in the prices of imported cars. Foreign automotive giants brought a multitude of their latest models into China. According to WTO regulations, starting from 2006, the import tariffs on complete vehicles in China were lowered from the previous 30% to 28%. In 2010, they were further reduced to 25%. Tariffs on automotive components like transmissions, shock absorbers, radiators, clutches, and steering units decreased from 13.5% to 12.9% and eventually to 10%.
China's entry into WTO brought about increased competition from domestic and foreign automotive brands. Amidst this intense competition, the prices in the domestic automotive market continued to decline. The annual average reduction in car prices has exceeded 8%, with a particularly significant decrease of 13.5% in 2004.[40][41]
The rapid growth
Wuling has been the most popular minivan brand during 2000-2020. Wuling Hongguang achieved a record-breaking annual sales of 750,000 in the Chinese market in 2014.[42]
The Chinese automotive market experienced explosive growth after 2000. This growth is closely tied to China's economic development and the rise of the middle class. An increasing number of Chinese households can afford cars, leading to a surge in sales. China's automobile production surged from 2 million vehicles in 2000 to 29 million vehicles in 2017, marking a growth of over fourteen-fold within 17 years. Its global market share rose from 3% to 30%, achieving remarkable growth. China has become the largest auto producer in human history, surpassing the combined production of traditional developed countries like the United States, Japan, and Europe. [22]
In 2017, there were 300.3 million registered vehicles in China.[43]
Intensified competition
Haval H6, best-selling SUV for 100 consecutive months, still holding the highest monthly sales record of 80,000 units in Chinese market.[44]
In the 2010s, with the rapid growth of China's automobile production, China became the country with the most diverse range of automotive brands globally. It has the most brands and models, which made it the most competitive market in the world.[45] Apart from mainstream joint venture brands dominating the mid-to-high-end market, there was a substantial presence of local state-owned and private small and medium-sized automotive companies. However, after 2018, an increasing number of these smaller brands became 'zombie company' state, with many suspending production and operations, as market-driven consolidation accelerated. The number of Chinese automotive brands increased from just over 20 in the early 1990s to 84 in 2019.[46]
According to research by investment bank Goldman Sachs, newly opened Chinese car plants are the most robotized of such facilities worldwide.[48][49]
The "corner overtaking" strategy with new energy vehicles
BYD Tang was the top selling plug-in passenger vehicle in China in 2016.[50]
In 2009, the State Council of China issued the "Automobile Industry Adjustment and Revitalization Plan," which emphasized "Using new energy vehicles as a breakthrough, strengthening independent innovation to establish new competitive advantages." It explicitly outlined and anchored China's plan to use new energy vehicles as a catalyst to surpass the Western traditional automotive powerhouses, breaking their dominance in internal combustion engine technology. This strategy is commonly referred to as the "corner overtaking strategy" in the Chinese automotive industry.[51]
The strategy is considered a success. In 2010, China's sales of new energy vehicles (NEV) were only 5,000 units. By 2015, the sales had surged to 331,000 units. Since 2016, China has consistently maintained its position as the world's leader in terms of the total stock of NEVs and annual additions. The annual compound growth rate of production and sales of NEV has consistently remained at around 50%. In 2020, China achieved a milestone with NEV sales reaching 1.367 million units, accounting for more than 50% of global market share.[52][53]
Progress towards global leadership (2020–present)
Since 2020, the Chinese automotive industry has entered a phase marked by the maturation and advancement of technology among local manufacturers. As a result, there has been a notable increase in the market share held by local manufacturers within the domestic market. Additionally, many foreign brands have sought partnerships with Chinese automakers to capitalize on their technological advancements and supply chain capabilities.
However, the market dynamics in China also led to a significant overcapacity and underutilization. In 2023, China's light vehicle production capacity was 48.7 million units, with a capacity utilization rate of 59%.[54] This condition prompted many Chinese carmakers to increase exports and expand sales overseas.[55] Chinese industry dominance in electric car production and the increasing export volume prompted many countries, mainly from the West, to impose restrictions and increase scrutiny on Chinese-made vehicles.
Increasing share of local manufacturers
Yangwang U8, a luxury high-performance SUV from BYD
According to the China Passenger Car Association (CPCA), in the first half of 2020, the market share of local brands in the Chinese automotive market was at slightly more than 30 percent, with German and Japanese brands then at around 30 percent and 25 percent respectively. Two years later, in October 2022, the share of local car brands in China reached 51.53 percent. It was the first time in history that the monthly share of local car brands in China exceeded 50 percent. In contrast, the dominance of foreign brands are gradually declining. The share of German brands fell to 19.25 percent and Japanese brands fell to 18.94 percent in October 2022. Throughout 2023, the market share of local brands has remained at around 50 percent.[56][57] These changes were attributed to the rapidly increasing popularity of new energy vehicles, and the failure of foreign brands to catch up with the shift.[58]
Li Auto manufacturing plant in Beijing. The company took over the plant from Beijing Hyundai which have had decreasing sales.
As a result of these market dynamics, some joint ventures that were already facing challenges during the era of traditional fuel-powered cars are further marginalized. In May 2023, Zhu Huarong, chairman of Changan Automobile, predicted that "in the next 2-3 years, it is conservatively estimated that 60%-70% of brands will face closure and transfer."[54] Between 2018 and 2023, eight joint venture manufacturers opted to withdrew the Chinese markets. Other joint ventures with significantly decreased sales are scaling back their production capacity by closing and selling their underutilized manufacturing plants. The remaining production capacity has been acquired by their Chinese joint venture partners.[54]
Phasing-out of foreign joint ventures/brands during 2010–2020s
A Nio Power Battery Swap station in China. Nio pioneered the battery swapping capability.
Amidst the fierce domestic competition in China's domestic market, the world's largest automotive market, the competitiveness of the Chinese automotive industry chain continues to rise, gradually gaining a leading position in technology. The reputation of Chinese carmakers has rapidly shifted, from being seen as making low-quality knock-offs to becoming true competitors for Western brands. Chinese automakers have established the building blocks for future competitiveness in EV technology, software, digitalization, factor cost and supply chain areas.[59] China's domestic brands are also leading the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector.[60]
"Reversed" joint ventures of western manufacturers
Dacia Spring, built and rebadged by Dongfeng, is one of the most popular EV in Europe.Smart #1, built by Geely's joint venture with Mercedes-Benz. It is developed based on Geely's EV technology.
In the 1990s, Chinese automakers pursued Western technology through joint ventures. However, a reversal occurred in the 2020s, with Western manufacturers now seeking technological assistance from Chinese counterparts and invested in China through joint ventures. Several Chinese electric vehicle startups have leveraged their technological advantages, attracting investments from traditional Western automotive giants such as Renault-Nissan, VW, BMW, Mercedes-Benz, Toyota and Stellantis.
Toyota bZ3, Toyota's first EV sedan is powered by BYD's battery, motor and ECU.
In 2017, Renault-Nissan and Dongfeng set up a joint venture call "eGT New Energy Automotive" to produce A-segment EV. [61]
In 2019, Mercedes-Benz announced the establishment of a joint venture partnership with Chinese automaker Geely.[62] Geely acquired 50% of Smart brand to produce EV based on Geely's SEA platform.[63]
In July 2019, Renault Group announced a capital injection of 1 billion yuan to acquire a 50% stake in JMEV, an EV subsidiary of Jiangling Motors Corporation.[64]
In 2020, BMW and Great Wall Motor invested RMB 5.1 billion on a joint venture, Spotlight Automotive, to produce the Mini brand EV using the technology of Great Wall Motor.[65]
Mini Cooper SE, developed by GWM and manufactured by Spotlight Automotive, a joint venture between GWM and BMW.In 2020, Toyota announced its joint venture with Chinese manufacturer BYD. The joint venture was set to assist technical know-how for Toyota's EV development and supply the battery, electric motor and electronic control unit for Toyota's EV. [66]Toyota bZ3, the first electric sedan of Toyota, was built under the assistance of BYD with its technology.
In July 2023, Audi and SAIC announced their partnership that the EV platform from IM Motors, the brand of SAIC, will be introduced into Audi's electric models.[67]
In July 2023, Volkswagen Group announced its investment of $700 million in XPeng, the EV startup venture from China, for purchasing 4.99% stake of the company. The VW will collaborate with XPeng to develop two VW brand electric models for the mid-size segment in the Chinese market in 2026.[68][69]
In August 2023, Geely and Renault decided to set a joint venture Horse with each entity holding 50% stake, to manufacture internal combustion engined (ICE) and hybrid powertrains for Renault, Nissan and Mitsubishi vehicle with Geely's technology. [70]
In September 2023, Ford and Changan announced to establish a new joint venture Changan Ford NEV, to produce and distribute Ford vehicles based on Changan's technology of electric vehicle. Changan holds 70% stake in the JV while Ford holds 30%.[71][72]
In October 2023, Stellantis announced its investment to Leapmotor at the price of 1.5 billion euro, acquiring 20% of Leapmotor for the support of technology to built EV.[73]
"Reversed" joint ventures/investment of western manufacturers
Developing and producing Ford brand electric vehicles by Changan
Changan Ford NEV (30:70)
Suppression and restrictions from the West
Starting in 2020, the export of China's automobile came to the fore in global market. While the Chinese government has allowed Western manufacturers to rapidly expand and develop within its market since the inception of its Reform and Opening-up policy for more than four decades, Chinese automobiles' presence in world market is often perceived by the West as "invasion" and "threat", which caused alert and suppression by some western countries.
United States: During Donald Trump's presidency, the U.S. imposes a stiff 27.5 percent tariff for Chinese-made cars and has buttressed that with the protectionist tax credits of President Joe Biden's Inflation Reduction Act, which incentivized electric car and battery production in North America. In addition, hostility toward China from leaders in both political parties of U.S. make it difficult for Chinese carmakers to penetrate the U.S. market.[74]
In November 2023, a bipartisan group of U.S. lawmakers wanted the Biden administration to further hike tariffs on Chinese-made vehicles and investigate ways to prevent Chinese companies from exporting to the United States from Mexico to protect the U.S. automobile industry.[75] In December 2023, the U.S. Government rolled out rules for electric vehicle tax credits to suppress Chinese car imports. Any car using parts that comes from company which has more than 25 percent of board seats controlled by China will be disqualified for a $7,500 subsidy.[76][77]
European Union: In September 2023, European Commission President Ursula von der Leyen announced EU would launch an anti-subsidy investigation into Chinese electric vehicles, claiming "Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies. This is distorting our market"[78] though the average price of Chinese EV in EU market is significantly higher than they are in domestic market China. Chinese government believes that the investigation proposed by the EU is a practice of pure "protectionism," to protect the EU's own industry in the name of "fair competition."[79]
India: Outside the Western world, India has been keen to reject investment plans from Chinese car manufacturers due to escalation at the India-China border and a tougher stance towards investments from China.[80] Great Wall Motor initially proposed an investment of USD 1 billion and had plans to start manufacturing in 2021 by buying a former General Motors plant, before cancelling its plans in July 2022 due to failure of obtaining regulatory approvals. In July 2023, BYD Auto was forced to cancel its investment plans worth USD 1 billion to produce cars in India due to scrutiny from the Indian government, noting "security concerns", despite 16-year presence of BYD Company in the country.[81]MG Motor India had struggled to receive clearance from the Indian Government to obtain capital from parent SAIC Motor, until a local company JSW Group acquired a 35% share in the company.[82]
Western automobile industry and academia:Carlos Tavares, the CEO of Stellantis, a well-known criticizer of Chinese automobile industry, called the influx of Chinese car-makers an "invasion" and warned the "possibility of geopolitical tensions" with China in 2022.[83][84] However, after Stellantis invested 1.5 billion Euro to acquired stakes of Chinese startup venture Leapmotor in 2023, he defended Chinese automobiles presence in the global market, states "we have to adopt a global mentality. We do not support a fragmented world. We like competition. To start a probe is not the best way to tackle those questions"[85] and "Stellantis could benefit from "Leapmotor's competitiveness both in China and abroad".[86]
Professor Jim Saker, the president of the Institute of the Motor Industry in the UK, describe Chinese cars in UK as "invasion by trojan horse" and alleges there are "major security issues" with Chinese cars, that "paralyzing a country."[83]
The emergence of Software-Defined Vehicle (SDV)
AITO M9, designed and supplied by Huawei's hardware and software solution and sold through Huawei/HIMA showrooms
Since 2020s, by collaborating with Chinese tech giants companies, like Huawei, Baidu, DJI etc., Chinese manufacturers are increasingly offering new advanced safety features, autonomous driving functionality, internet access, and sophisticated infotainment options. Cars with these aspects are essentially evolving into an entirely new category called software-defined vehicles (SDVs).[87][88]
Huawei's partnership with automobile manufacturers has taken the form of three models, the standardized parts supply model, the "Huawei Inside" (HI) model, and the Harmony Intelligent Mobility Alliance (HIMA).[89][90] Baidu and DJI provide autonomous driving system and hardware to auto manufacturers.[91][92]Qihoo 360 invested the Chinese EV startup company Hozon Auto.[93]Geely collaborates with Baidu to set up joint venture brands and acquired Chinese smartphone company Meizu to empower its Polestar and Lynk & Co brands with its auto OS and AR system. Xiaomi is the first and the only Chinese tech company that is directly involved in car manufacturing and operates its factory in Beijing.[94]
Involvement of Chinese technology industry in the automotive industry
Harmony Intelligent Mobility Alliance (HIMA). Huawei provides a complete set of vehicle solutions and participates in product definition, design, marketing, user experience, quality control and delivery. While the manufacturers are responsible for vehicle manufacturing.
Huawei Inside (HI) model. Huawei provide full-stack smart car solution and Huawei's smart cockpit to car manufacturers. In this mode, Huawei empowers vehicle intelligence through the supply of both software and hardware, but does not participate in the design, development, and marketing of the vehicles.
China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country's automobile industry (see Fuel economy in automobiles). By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternate fuel will be increased to help optimize the country's energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternate fuel vehicles, especially CNG/LNG.
Environmental standards
On March 10, 2008, Beijing became the first city to require light-duty vehicles to meet China-4 emission standard, which was equivalent to Euro-4. Beijing shifted its emission standards to the fifth-stage standards for light-duty and heavy-duty vehicles in January 2013 and August 2015, respectively. On 12 April 2016, the Ministry of Environmental Protection (MEP) released the proposal for light-duty China-6 standard.
Electric vehicles (EV) and fuel cell vehicles (FCV)
Due to serious air pollution problems and ever-increasing traffic, alternative-energy vehicle production is an area of strong focus for the Chinese government, and several NEV-friendly policies have appeared at the national and local level as a result. In many cities, free licenses — otherwise a significant expenditure for traditional vehicles — are provided for electric vehicle owners, along with exemptions for registry lotteries. These kinds of policies have created strong interest in new energy vehicles within China.
New energy vehicle sales between January 2011 and March 2016, totaled 502,572 units, of which, over 92% were sold between January 2014 and March 2016. These figures include heavy-duty commercial vehicles such as buses and sanitation trucks. These figures only include vehicles manufactured in the country as imports are not subject to government subsidies. As of March 2016[update], the Chinese stock of plug-in electric vehicles consist of 366,219 all-electric vehicles (72.9%) and 136,353 plug-in hybrids (27.1%).[95][96][97][98][99][100]
As of December 2015[update], China is the world's largest electric bus market, and by 2020, the country was expected to account for more than 50% of the global electric bus market.[101] China also is the world's leader in the plug-in heavy-duty segment, including electric buses, plug-in trucks, particularly sanitation/garbage trucks.[102][103]
A September 2018 update by CNBC included a prediction that the market share of China's electric vehicles will grow by 40% in the short term and that China expected total annual sales of electric and gasoline-electric hybrid vehicles to be 2 million by 2020.[115] The government was encouraging the purchase of such cars with a short wait time for a new license plate and with government-backed discounts of up to 40% on electric vehicles.[116] In 2018, new-energy vehicles accounted for about 3% of China's new car sales; that was expected to increase to over 30% by 2030 according to an estimate by the Japanese Mizuho Bank.[117]
In October 2018, Tesla purchased land for the construction of an EV manufacturing plant in Shanghai's Lingang area.[118][119] By then, VW had already begun construction of its EV factory, with a planned annual capacity of 300,000 SAIC-VW MEB platform vehicles, starting with three battery-electric vehicles and two plug-in hybrids.[120][121][117]
As of 2022[update], major electric vehicle players in the Chinese industry include BYD Auto, Tesla China, SAIC-GM-Wuling, GAC Aion, and Changan Automobile. These five companies held more than 50 percent market share combined.[122] Chinese brands also account for about half of all EVs sold globally.[123]
Policies
The Chinese Automotive Industry Plan, announced on the main website of China's central government, said China aims to create capacity to produce 500,000 new energy vehicles, such as battery electric cars and plug-in hybrid vehicles. The plan aims to increase sales of such new-energy cars to account for about 5% of China's passenger vehicle sales.[124] At the 2010 Beijing Motor Show, more than 20 electric vehicles were on display, most of which came from native automakers. As of May 2010, at least 10 all-electric models have been reported to be on track for volume-production.[125] The first mass-produced plug-in hybrid car (BYD F3DM), all-electric minivan (BYD e6) and all-electric long-range bus (BYD K9) are Chinese.
In 2009, the Chinese government implemented policies to subsidize the purchase of plug-in hybrid and electric cars and buses in 10 cities. The per unit subsidies for passenger cars ranged between RMB 4,000 to RMB 60,000. In ten major cities such as Beijing and Xi’an, Chinese EV producers worked closely with taxi companies to formulate operational solutions that would improve core battery technologies, such as implementing multiple shifts.[126]
On November 2, 2020, the Chinese government introduced the "New Energy Vehicle Industry Development Plan (2021–2035)" to achieve a sustainable automotive future with reduced emissions. This plan is part of supportive policies aimed at strengthening the EV industry. On 21 June 2023, China unveiled a significant RMB 520 billion (US$72.3 billion) tax incentive package spanning four years to provide tax breaks for new energy vehicles. It offers a complete exemption from purchase tax for NEVs bought in 2024 and 2025, resulting in potential savings of up to RMB 30,000 (US$4,170) per vehicle. From 2026 to 2027, the exemption will be halved and capped at RMB 15,000 (US$2,078). This initiative aims to stimulate automotive industry growth amidst sluggish auto sales. Regions like Shenzhen and Shanghai have also introduced local initiatives to support the NEV industry, including financial support and implementation plans to drive growth in their respective regions.[122]
Production and supply chain
In terms of electric vehicle production, China has a significant advantage over other countries. The Chinese automotive industry holds a dominant position in the electric vehicle supply chain, with more than 600,000 EV-related enterprises operating in the country as of 2022[update].[122][127] Some 75 percent of the world's lithium-ion batteries are made in China and the country's EV manufacturing facilities are close to the source these components. China also houses more than half of the world's processing and refining capacity for lithium, cobalt, and graphite, which are essential materials for making EV batteries. 70 percent of the global production capacity for cathodes and 85 percent for anodes are also hosted in China.[122]
China's strength in EV supply chain resulted in reduced costs in logistics, labor, and land management. Additionally, economies of scale are enabled by its large domestic EV market. China's EV manufacturing sector enjoys a cost advantage of 20 percent compared to Western markets such as those in the U.S. and Europe.[122] In January 2023, according to an executive of French automotive supplier Forvia, Chinese carmakers can build an electric vehicle (EV) for €10,000 less than European carmakers, an overwhelming cost advantage that will put pressure on European manufacturers in their home market. Chinese manufacturers are able to produce electric vehicles with lower cost by having lower research and development costs, lower levels of capital spending and lower labour costs than European rivals.[128] The major disadvantage of Chinese electric cars in Europe is the limited capacity and high cost of shipping, according to research group Schmidt Automotive.[129]
In China, authorized car dealership are called 4S car shops. The 4S represents sales (整车销售), spare parts (零配件), service (售后服务) and survey (信息反馈). In most cases, brand-name new cars can only be purchased from 4S shops.
The profit of car dealers in China is quite high compared to the rest of the world, in most cases 10%. This is supposedly due to the 'non-transparent invoice price' as announced by manufactures and to the premiums they charge for quick delivery. Due to the lack of knowledge for most customers, dealers can sell add-ons at much higher prices than the aftermarket. For new cars in high demand, a high premium is added for instant delivery or just placing an order.
There is no regulation by either the government or associations but some retailers are members of the China Automobile Dealers Association (CADA).[130]
Exports
Great Wall Motor exports some cars to Russia as knock-down kits, to be assembled in a Haval factory in Tula Oblast.MG ZS is most exported Chinese car model in 2023, with a total of 251,000 units exported.[131]
As of 2012[update], exports of Chinese automobiles were about 1 million vehicles per year and rapidly increasing. Most sales were made to emerging economies such as Afghanistan, Algeria, Brazil, Chile, Colombia, Costa Rica, Ecuador, Egypt, Iraq, Iran, Libya, Mexico, North Korea, Peru, the Philippines, Russia, Saudi Arabia, South Africa, or Turkey[132] where a Chinese-made automobile such as a Geely, Great Wall, or Chery sells for about half of what a comparable model manufactured by a multinational brand such as Toyota does. Cars made in China by multinational joint ventures are generally not exported. The quality of Chinese cars is increasing rapidly but, according to J.D. Power and Associates in 2012, it was not expected to reach parity with multinational manufacturers until about 2018.[133]
Most of cars manufactured in China are sold within the country; in 2011, exports totalled 814,300 units.[132] China's home market provides its automakers a solid base and Chinese economic planners hope to build globally competitive auto companies[134][135] that will become more and more attractive and reliable over the years.[136] In 2017, the country exported roughly 891,000 vehicles.[137] In that year, the value of exports was nearly $70 billion in auto parts and $14 billion in cars, while total imports (parts and vehicles) totaled about $90 billion.[138]
In 2022, Chinese car exports reached 3.11 million units, ranking second worldwide. Domestic sales still accounted for the bulk of the 27 million units produced. Electric cars sales totaled 679,000.[4] In 2023, China overtook Japan, becoming the largest car exporter in the world. The increased export numbers contributed to the growing demand for electric cars.[5]
Unlike local Chinese manufacturers, joint venture manufacturers were reluctant to export their vehicles from China due to having to share 50% of the profit with its local partner, as opposed to keeping a full profit by exporting from fully-owned plants elsewhere.[139] Notable exceptions in the early era included Honda, which formed China Honda Automobile in 2003 to produce vehicles for exports to Europe,[140] and SAIC-VW that exported Volkswagen Polo to Australia in 2004.[141] As a result of excess production capacity, low cost of production, and the more accessible electric car supply chain,[142][139] some joint ventures such as SAIC-GM,[143]Changan Ford and Jiangling Motors (since 2018),[144]Beijing Hyundai (since 2018),[145]Yueda Kia (since 2018),[139]Dongfeng Honda (since 2023),[146] and others started shipping vehicles from China to overseas markets.
Export volume of Chinese automobile industry[25][147]
Year
Total
Passenger vehicle
Commercial vehicle
2010
544,900
283,000
261,900
2011
814,000
476,100
338,200
2012
1,056,100
661,200
394,900
2013
977,300
596,300
381,000
2014
910,400
533,000
377,300
2015
699,400
345,400
354,000
2016
708,000
477,000
231,000
2017
891,000
639,000
252,000
2018
1,041,000
758,000
283,000
2019
1,024,000
725,000
299,000
2020
995,000
760,000
235,000
2021
2,015,000
1,614,000
402,000
2022
3,111,000
2,529,000
582,000
2023
5,220,000
4,450,000
770,000
The top-10 most-exported manufacturers in China[148][25]
^cycles, This text provides general information Statista assumes no liability for the information given being complete or correct Due to varying update; Text, Statistics Can Display More up-to-Date Data Than Referenced in the. "Topic: Automotive manufacturing industry in China". Statista. Retrieved 2022-11-19.
^Myers Macinata, Elizabeth; Howe, Josephine B.; van Ingen Schenau, Erik (Autumn 2012). "Daniel F Myers and the Minsheng truck". China Motor Vehicle Documentation Centre. 54. Automotive History Review. Retrieved 8 April 2017.
^Chang, Crystal (2009). Developmental Strategies in a Global Economy: The Unexpected Emergence of China's Independent Auto Industry. p. 7. SSRN1450117.
^"China now has over 300 million vehicles". South China Morning Post. 20 April 2017. Retrieved 27 November 2018. 10 of the 25 most congested cities globally are in China
^Wanxiang, Liu (2016-04-12). "中汽协：3月新能源汽车销量达2.3万辆 第一季度累计销售近6万辆" [Automobile Association: March new energy vehicle sales reached 23,000 in the first quarter, total sales of nearly 60,000] (in Chinese). D1EV.com. Retrieved 2016-04-12.
^Jeff Cobb (2015-09-16). "One Million Global Plug-In Sales Milestone Reached". HybridCars.com. Retrieved 2015-09-16. Cumulative global sales totaled over 1 million highway legal plug-in electric passenger cars and light-duty vehicles by mid-September 2015.
^Liu Wanxiang (2017-01-12). "中汽协：2016年新能源汽车产销量均超50万辆,同比增速约50%" [China Auto Association: 2016 new energy vehicle production and sales were over 500,000, an increase of about 50%] (in Chinese). D1EV.com. Retrieved 2017-01-12. Chinese sales of new energy vehicles in 2016 totaled 507,000, consisting of 409,000 all-electric vehicles and 98,000 plug-in hybrid vehicles.
^Automotive News China (2018-01-16). "Electrified vehicle sales surge 53% in 2017". Automotive News China. Retrieved 2020-05-22. Chinese sales of domestically-built new energy vehicles in 2017 totaled 777,000, consisting of 652,000 all-electric vehicles and 125,000 plug-in hybrid vehicles. Sales of domestically-produced new energy passenger vehicles totaled 579,000 units, consisting of 468,000 all-electric cars and 111,000 plug-in hybrids. Only domestically built all-electric vehicles, plug-in hybrids and fuel cell vehicles qualify for government subsidies in China.
^"中汽协：2018年新能源汽车产销均超125万辆，同比增长60%" [China Automobile Association: In 2018, the production and sales of new energy vehicles exceeded 1.25 million units, a year-on-year increase of 60%] (in Chinese). D1EV.com. 2019-01-14. Retrieved 2019-01-15. Chinese sales of new energy vehicles in 2018 totaled 1.256 million, consisting of 984,000 all-electric vehicles and 271,000 plug-in hybrid vehicles.
^Kane, Mark (2020-02-04). "Chinese NEVs Market Slightly Declined In 2019: Full Report". InsideEVs.com. Retrieved 2020-05-30. Sales of new energy vehicles totaled 1,206,000 units in 2019, down 4.0% from 2018, and includes 2,737 fuel cell vehicles. Battery electric vehicle sales totaled 972,000 units (down 1.2%) and plug-in hybrid sales totaled 232,000 vehicles (down 14.5%). Sales figures include passenger cars, buses and commercial vehicles..
^China Association of Automobile Manufacturers (CAAM) (2021-01-14). "Sales of New Energy Vehicles in December 2020". CAAM. Retrieved 2021-02-08. NEV sales in China totaled 1.637 million in 2020, consisting of 1.246 million passenger cars and 121,000 commercial vehicles.
^China Association of Automobile Manufacturers (CAAM) (2022-01-12). "Sales of New Energy Vehicles in December 2021". CAAM. Retrieved 2022-01-13. NEV sales in China totaled 3.521 million in 2021 (all classes), consisting of 3.334 million passenger cars and 186,000 commercial vehicles.
^"全球热销超84万辆 上汽MG连续五年蝉联"单一品牌出口冠军"" [Globally selling over 840,000 units, SAIC MG has been the “Single Brand Export Champion” for five consecutive years.]. 新华财经-中国金融信息网. 2024-01-19. Retrieved 2024-04-02.
^ abcAndrews, Mark (2024-04-03). "Kia begins production of EV5 for export in China". CarNewsChina.com. Retrieved 2024-04-09. Until recently few JVs chose to do this due to having to share 50% of the profit with their JV partner.
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