Chinese self-owned NEV brands have started marketing globally

By Jeff Lee 2023-03-29

Chinese self-owned auto brands hadn’t played a major role in the Chinese ICE car market. However, starting in 2020, with EV’s gradual maturity of its technologies and the environmental landscape, Chinese self-owned brands began to leapfrog ICE cars and focus on NEV technology. From startup brands in the mid-2010s and the subsequent transformation of traditional car manufacturers, these forces converged and exploded in 2020, surpassing joint venture brands and beginning to dominate the huge Chinese car market. At the same time, multiple brands with ambitious plans began to actively layout global markets and plan their next big moves for their companies. I believe that China will become the world's largest auto exporter in a few years.

Last year, China surpassed Germany for the first time to become the world's second-largest exporter of automobiles after Japan. Among them, new energy vehicles (BEV and PHEV) reached 1.06 million units, nearly doubling from 2021, leaving behind other countries' export volumes and further consolidating its dominant position in the EV era. As we all know, protectionism in the US automobile industry has been rising in recent years. From critical raw materials to components, such as triad (battery, electric control, motor) technologies and high-end chips, emphasis has been placed on the development of local US industries, forming immense obstacles to the EV trade between countries. The ability of Chinese self-owned brands to break through trade barriers and achieve annual exports of over one million units in the early stages of the EV era is not solely due to their low prices but rather several crucial factors behind it...

  • Advanced triad technologies: Chinese car brands have quietly surpassed traditional German, Japanese, and US car manufacturers in battery technology, in-vehicle infotainment system integration, and mature ADAS level 2+ practicality over the past few years. They have also accumulated decades of experience operating joint ventures with international brands. This combination of hard and soft power has enabled Chinese car brands to come out on top.
  • Complete and stable supply chain: Aside from human factors such as "lockdowns" due to pandemics, no country has been able to develop a solid supply chain for raw materials and components like China has. China's current lithium-ion battery production capacity accounts for more than half of the global total. Critical raw materials such as lithium, cobalt, and nickel are either mined locally or sourced from related areas (such as cobalt from the Democratic Republic of the Congo). In addition, traditional component suppliers have mature technology and experience working with joint venture brands and a cost advantage due to their large production volume and the rapid amortization of development investment costs.
  • Early start in global layout strategy: Chinese car brands have already begun to lay out their market strategy in developing countries such as Southeast Asia and Central and South America, as well as in advanced markets such as Europe and Japan (the US market has begun to block Chinese brands). Especially in Western Europe, several Chinese car manufacturers have set up headquarters and sales outlets in the region two to three years ago. Some have even started building vehicle assembly plants in Eastern Europe with lower operating costs to facilitate long-term market expansion plans.

The fact that Chinese brands exported over a million EV units last year is just the beginning. As charging infrastructure continues to develop in developing regions globally, EV sales will rapidly grow due to the introduction of Chinese brands. I believe that the driving force for EV growth in the next few years, apart from the United States, will be Southeast Asia, India, and other regions, where China will play a crucial role. However, the final push will be to truly convince European consumers to switch from buying EVs from the US, Germany, France, and Italy to Chinese-made products that have relatively lacked quality and reliability. Even Japanese automakers have yet to truly capture European consumers’ hearts. Perhaps this tipping point will take a few more years to arrive!