China’s expanding electric vehicle market has dealt a heavy blow to the global mainstream car manufacturers’ sales of gasoline vehicles. However, foreign enterprises are not the only losers in this situation. Many traditional Chinese car companies are also facing the dilemma of plummeting sales, leading to dumping surplus fossil fuel vehicles domestically and globally.
According to a report released by Reuters on the global expansion of Chinese car manufacturers, industry and government data show that in terms of gasoline car exports (excluding electric vehicles and plug-in hybrid vehicles), China surged to become the world’s largest car exporter last year.
The report is based on research on car sales data from dozens of countries and interviews with over 30 individuals, including top executives from 11 Chinese car manufacturers, 2 Western car manufacturers, Chinese brand managers, and industry researchers.
As Western countries focus on the threat posed by the highly subsidized Chinese electric car dumping and protect their domestic markets with tariffs, China’s surplus fuel cars are flooding emerging and second-tier markets globally, causing unprecedented impacts on European and American car manufacturers.
According to data from Chinese consultancy firm Automobility, since 2020, gasoline cars have accounted for 76% of China’s total car exports, with the annual export volume increasing from 1 million vehicles to an estimated over 6.5 million vehicles this year.
Reuters’ investigation found that driving this wave of gasoline car exports are measures similar to those of electric car subsidy policies – these measures by the Chinese Communist authorities have subsidized dozens of Chinese electric car manufacturers, triggering a destructive price war that has damaged the business of Volkswagen (VW), General Motors (GM), Nissan, and other companies in China.
This phenomenon highlights the profound impact of China’s industrial policies – as foreign enterprises struggle against government-supported businesses, these Chinese companies are fully committed to achieving Beijing’s goal of dominating key domestic and international industries.
The influx of Chinese gasoline cars into emerging and second-tier markets underscores that the current policy implemented by Beijing differs from its previous strategy of cooperation with foreign companies. The Chinese Communist Party had previously built the domestic gasoline car industry with the help of foreign car manufacturers’ technology.
China’s largest car exporters include state-owned traditional car manufacturing giants such as SAIC, BAIC, Dongfeng, and Changan, which have relied on joint ventures with foreign car manufacturers to gain profits and engineering technology.
These partnerships began in the 1980s when the Beijing authorities allowed foreign entry into the Chinese market as a condition, forcibly facilitating these “marriages of convenience” between Chinese and foreign companies. However, in recent years, with the rise of new private electric vehicle manufacturers like BYD, the sales of these joint ventures have plummeted drastically.
Take SAIC General Motors as an example, data shows that their annual sales in China dropped from over 1.4 million vehicles in 2020 to 435,000 vehicles by 2024.
Currently, these Chinese state-owned enterprises are aggressively expanding into the export market, which were once the business kingdom of their partners – those foreign car companies. SAIC’s export volume (primarily its own brands, excluding GM) skyrocketed from nearly 400,000 vehicles in 2020 to over a million vehicles last year.
The phenomenon of Chinese car manufacturers rushing to export gasoline cars can be traced back to the surplus production capacity caused by Beijing’s stimulus policies.
Bill Russo, CEO of Automobility, estimates that the rapid development of Chinese electric vehicles has left assembly lines with idle production capacity of up to 20 million gasoline vehicles per year. This excess capacity drives up costs, forcing car factories to redirect idle capacity to export markets.
Russo stated, “This excess capacity is now shifting to other markets globally.”
Consulting firm AlixPartners predicts that by 2030, Chinese car companies’ overseas annual sales will grow by 4 million vehicles, with significant shares in South America, the Middle East, Africa, and Southeast Asia markets. Taking into account the expected growth in the world’s largest car market – China, within five years, Chinese car companies are projected to account for 30% of the global automotive industry.
Stephen Dyer, co-managing partner of the firm’s China region, emphasized, “This growth will come at the cost of everyone else.”
Reuters’ investigative report indicates that over the past decade, Beijing has encouraged car manufacturers to build new electric car plants instead of retooling existing gasoline car factories. To achieve the central economic goal, local governments have competed to subsidize the construction surge, attracting electric car manufacturers.
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