Opinion | Title of top car exporter won’t make China’s auto industry No 1 in the world. Here’s what will
- China’s dominance in global sales and exports and early lead in the EV market are big advantages, but they’re not enough
- To shape the global auto industry, Chinese companies must invest in R&D to move up the global supply chain, and transform their business models to become world-class brands
The global automotive industry is undergoing profound changes and China may be the most important driver. In the first half of 2023, Chinese carmakers exported 2.14 million vehicles, according to the China Association of Automobile Manufacturers, surpassing their Japanese counterparts (2.02 million). It’s the first time China has captured the crown as the world’s largest car exporter.
While a noteworthy achievement, this does not mean China is ready to dominate the global auto industry. To lead the pack, it must secure a better foothold in the global supply chain and create more valuable brands.
It’s no surprise that new energy vehicles (NEVs) – a widely used designation in China which includes purely electric vehicles (EVs), plug-in hybrids and fuel cell vehicles – are driving the expansion of China’s auto industry both at home and abroad.
In 2022, China exported nearly 679,000 NEVs, accounting for 21.8 per cent of total vehicle exports. This proportion rose to 25 per cent in the first half of 2023.
Looking at the domestic market, from January to June this year, NEVs contributed 28.3 per cent (3.75 million) of total vehicle sales in China, compared with 3.5 per cent (48,220) in Japan. In the same period in the US, EV sales continued to grow rapidly but accounted for only 7.2 per cent of total vehicle sales.
The switch to new energy reflects the larger trend of humankind’s quest for a more sustainable future. According to the International Energy Agency, by 2030, EVs are expected to account for between 30 per cent and 60 per cent of global vehicle sales, depending on the degree of policy commitment. Similarly, a joint study by research firm EVTank and the Beijing-based Yi Wei Institute of Economics estimates that the proportion of NEVs in global vehicle sales will leap to almost 50 per cent by 2030.
