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- Chinese electric cars are in the fast lane
On September 9, it was that time again. For the fifth time, electric vehicle enthusiasts celebrated World EV Day, which focuses on the role of battery-powered electric vehicles (EVs) in promoting sustainability and reducing pollution through zero tailpipe emissions. Plenty of things have changed since the first EV Day in 2020, and not all of them for the better for Europe's traditional carmakers.
In 2023, global EV sales hit around 14 million, accounting for 18% of all cars sold worldwide, with estimates suggesting their share could reach 20% this year.[1] Electrification of the car fleet has become a central plank for more than 20 global carmakers, covering 90% of global automotive sales in 2023, all of whom have set electrification targets.[2] One country stands out when it comes to dominating the EV market domestically and increasingly abroad - and it is neither on the old continent nor in the new world.
In July 2024, 51% of vehicles sold in China were battery electric or plug-in hybrids.[3] One reason for this is the extreme price war, with Chinese brands putting ever more pressure on Western competitors in their own country.[4] As a result, more than 60% of electric vehicles sold in China last year were cheaper than the average price of cars with combustion engines. In comparison, the purchase costs of electric vehicles sold in Europe and the USA are still 10 to 50% higher than those of cars with combustion engines.[5] China now accounts for almost three out of every five electric vehicles sold worldwide.[6]
China’s increasing presence in global EV car sales
Source: Bloomberg NEF Electric Vehicle Outlook 2024
Thanks to these successes, and perhaps also due to overcapacities that exceed even the rapid growth of their domestic market, Chinese brands have increasingly turned their attention abroad.[7] Lately, China’s automakers have been particularly successful in other emerging markets. In Brazil, passenger EV sales have nearly tripled in 2023 and China-based automakers now account for 76% of all EV sales.[8] To be sure, total EV sales still only represent less than 5% of all passenger car sales in Brazil.[9] But there are similar market share increases in other parts of the world, as our Chart of the Week shows. The share of Chinese automakers in Thailand's EV sales have increased from 46% in 2022 to 77% in 2023.[10] While their penetration in Europe markets remains significantly lower, growth has been swift since the first World EV Day in 2020. Back then, Chinese cars accounted for little more than 2% of total EVs sales in Europe; last year, their share reached 11%.
In response to the rising threat posed to their own domestic producers, calls have been getting louder in the U.S., the EU and Canada to impose higher tariffs on Chinese EV imports.[11] In Europe, this follows an investigation that identified allegedly unfair subsidies benefiting Chinese EV producers. It would probably be more useful for politicians to focus on the rapid, comprehensive expansion of the charging infrastructure.[12] In any case, China’s dominance in the EV market is likely to continue in the near-term, as Chinese investments shift from battery production to EV manufacturing in Europe, with Hungary among the first EU member to receive significant Chinese EV-related foreign direct investment.[13]
European car makers face another threat namely consumer loyalty to established European premium brands. Such loyalties appear fragile when switching from internal combustion engines to electric cars. According to one survey, two-thirds of European customers are interested in buying an entirely new brand when making the move to an electric vehicle, with Asian disrupter brands appearing the most popular.[14]
