Automotive industry in China

Automotive industry in China
The automotive industry in China has been the largest in the world measured by automobile unit production since 2008. 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.
While most of the cars manufactured in China are sold within China, exports – accounting for 11.5% of total production – reached 3.11 million units in 2022, making the country the world's second biggest car exporter. 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. China's home market provides its automakers a solid base and Chinese economic planners hope to build globally competitive auto companies that will become more and more attractive and reliable over the years.
The main industry group for the Chinese automotive industry is the China Association of Automobile Manufacturers (中国汽车工业协会).
Manufacturers and brands
The traditional "Big Four" domestic car manufacturers are SAIC Motor, FAW, Dongfeng and Changan. Other Chinese car manufacturers are Geely, BAIC, BYD, Chery, GAC, Great Wall, JAC and Seres. In addition, several multinational manufacturers have partnerships with domestic manufacturers.
Central government controlled state-owned enterprises
FAW (First 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, Jie Fang, 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 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 Dongfeng were the two major manufacturers before the Reform and Opening-up of China. It owns Voyah, M-Hero, Aeolus, Forthing, Dongfeng Nammi brands and operates joint ventures include 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, Deepal, Oshan and Kaicene brand. Foreign joint venture companies include Avatr, Ford and Mazda.
Local government controlled state-owned enterprises
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 government of Shanghai. SAIC sells vehicles under a variety of brands. Brand names include IM, Rising, Maxus, MG, Roewe, Wuling, Baojun, Yuejin. Joint venture brands include Buick, Chevrolet, Iveco, Škoda, Volkswagen.
Chery (Chery Automobile), a Chinese state-owned automobile manufacturer based in Anhui and controlled by the government of Wuhu City. They have a foreign joint venture with Jaguar Land Rover for the production of Jaguar and Land Rover cars in China. They also sell cars under the Chery, Exeed, Jetour and iCAR brand.
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 government of Guangdong Province. GAC sells passenger cars under the Trumpchi and Aion brand operates foreign joint-venture with Honda and Toyota.
BAIC (Beijing Automotive Industry Corporation), is a state-owned enterprise located Beijing and controlled by the government of Beijing City. Its owns the brands of Arcfox Beijing, Beijing Off-road, and Foton. BAIC's parent is the ). It has foreign joint ventures with Hyundai and Mercedes-Benz.
JAC (Jianghuai Automobile Corporation, Chinese: 安徽江淮汽车股份有限公司) is a state-owned enterprise based in Hefei, Anhui Province and controlled by the provincial government of Anhui. It owns the brands of JAC, Sehol and OEMs vehicles for NIO.
Private owned manufacturers
BYD (BYD Auto), is an auto manufacturer based in Shenzhen, founded by BYD Company who are known for their batteries and electric buses around the world. It is currently the biggest EV manufacture of the world.
Geely (Zhejiang Geely Holding Group), 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 operate joint venture with Proton and Smart.
GWM (Great Wall Motor), private company famous for manufacturing SUVs headquartered in Baoding, Hebei. Great Wall sells vehicles under the brands of Haval, Wey, Tank and Ora. It operate a joint-venture called Spotlight Automotive with BWM Group to produced electric Mini vehicle.
Seres (Seres Group), is a private manufacturer headquartered in Chongqin. It used to be famous for producing light commercial vehicles and budget passenger vehicle. Backed by Chinese tech giant Huawei, Seres is transforming to producing premium electric vehicle since 2021. It owns the brand of Seres, AITO, Fengon and DFSK.
Foreign manufacturer and joint ventures
Since the initiation of reform and opening-up in China, almost all major international automobile manufacturers have entered the Chinese market through joint ventures. China has improved its industrial capabilities by absorbing advanced foreign technologies and management practices. Since 2010s, some foreign manufacturers and brands gradually exited the Chinese market due to their lack of competitiveness, such as Suzuki, Mitsubishi, FCA (Jeep, Fiat, Chrysler), Renault, PSA (DS) etc.
Foreign manufacturers
Until 2017, Chinese automotive policy required that a foreign carmaker must form a joint-venture with a Chinese carmaker if the former plans to sell its electric vehicles, with the Chinese carmaker owning 51% of the joint venture. However, since 2017, the Chinese government had indicated that it would liberalize foreign control in the automotive sector, allowing full ownership by foreign companies.
In 2017, Tesla has been allowed to set up a plant in Shanghai city, make it the first foreign automaker to open a wholly owned factory in China. In 2022, BMW and Volkswagen had acquired 75% stake in their joint ventures, which enables them to have the majority control of its Chinese joint ventures.
Tesla
Gigafactory Shanghai (currently the only fully foreign owned car manufacturer in Mainland China)
BMW
BMW Brilliance (joint-venture with Brilliance Auto Group, a majority 75% stake was acquired by BWM in 2022)
Volkswagen
Volkswagen Anhui (joint-venture with JAC, a majority 75% stake was acquired by Volkswagen in 2020)
Joint-venture manufacturers
Since the Reform and Opening-up in 1980s, Chinese government only allowed a foreign car manufacturer to partner with at most two Chinese car companies to produce cars locally. This restriction is to be loosened by 2022, and is already loosened for 'new energy' vehicle corporations. Volkswagen, for example, has already established three joint ventures (VW-JAC has been majority acquired by VW).
Volkswagen
FAW-VW (with FAW) (Volkswagen, Jetta, Audi)
SAIC-VW (with SAIC (Volkswagen, Skoda, Audi)
General Motors
SAIC-GM (with SAIC) (Cadillac, Buick, Chevrolet)
SAIC-GM-Wuling (with Wuling, SAIC)
Ford
Changan Ford (with Changan)
Jiangling Ford (with Jiangling Motors)
Stellantis
Dongfeng PSA (with Dongfeng) (Peugeot, Citroën)
Renault-Nissan-Mitsubishi
Dongfeng Nissan (with Dongfeng) (Nissan, Infiniti, Venucia)
Zhengzhou Nissan (with Dongfeng)
Toyota
FAW Toyota (with FAW)
GAC Toyota (with GAC)
Mercedes-Benz Group
Beijing Benz (with BAIC)
Fujian Benz (with BAIC, Fujian Motors)
Honda
Dongfeng Honda (with Dongfeng)
Guangzhou Honda (with GAC)
Hyundai-Kia
Yueda Kia (with Yueda)
Beijing Hyundai (with BAIC)
Isuzu
Jiangxi Isuzu (with Jiangling)
Qingling Motors (with Qingling)
Tata Group
Chery Jaguar Land Rover (with Chery)
Mazda
Changan Mazda (with Changan)
History
China's automobile industry can be traced back to the early origin of Changan Automobile in 1862 when Li Hongzhang set up a military supply factory, the Shanghai Foreign Gun Bureau. The first automobile in China was purchased from Hong Kong in 1902 by Yuan Shikai and gifted to Empress Dowager Cixi. It was later put on display in the Summer Palace Museum. During the early twentieth century, major western automobile manufacturers such as the Ford Motor Company, General Motors, and Mercedes-Benz had plants operating in Shanghai.
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. 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, it 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. 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. In 2017, total vehicle production in China reached 28.879 million, accounting for 30.19% of global automotive production. In 2023, China overtook Japan and became the world largest car exporter.
The dawn of industrialization (1928 to 1949)
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. 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 Second Sino-Japanese War in China because of fuel shortages. Tung oil was also used during the war as a petroleum substitute. 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.
The socialist revolution era (1949 to 1980)
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.
Since the foundation of the People's Republic of China, several vehicle assembly factories were set up in the 1950s and 1960s. They were Beijing (today's Beijing Automotive Industry Holding Corporation), Shanghai (today's Shanghai Automotive Industry Corporation), Nanjing (later Nanjing Automobile (Group) Corporation, merged with SAIC), and Jinan (evolving into China National Heavy Duty Truck Group). The Second Automobile Works (later Dongfeng Motor Corporation) was founded in 1968.The first Chinese production vehicles were trucks made by the First Automobile Works in 1956, called the Jiefang CA-10. 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 tremendous 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 unitsprivate car ownership was virtually unknown at the time).
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 US. 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.
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. 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.
Emergence of joint ventures and "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.
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. 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; tooling may not have been allowed to slip past borders.Until the late 1990s, there were eight joint venture enterprises in China producing passenger cars, including Shanghai Volkswagen, FAW-Volkswagen, Beijing Jeep, Guangzhou Peugeot, Dongfeng Citroën, Changan Suzuki, Changhe Suzuki, and Southeast Motor.
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.
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-VW Santana, 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-VW Audi 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.
Several enterprises entered the automobile industry since 1994. Some of them are originated from defense industry, such as Chang'an Motors, Changhe, and Hafei Motor; some were developed from old state-owned companies, such as BYD Auto, Brilliance China Auto, Chery Automobile, and Changfeng Automobile. Others are private-owned companies, such as Geely Automobile and Great Wall Motors.
The explosive growth and expansion (2000 to 2020)
Tsunami of entering the WTO
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.
The rapid growth
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 fourteenfold. 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.
In 2017, there were 300.3 million registered vehicles in China.
Intensified competition
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. 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.
On February 29, 2016, the Ministry of Industry and Information Technology shut down 13 automobile manufacturers that did not meet mandatory production evaluations for two consecutive years.
According to research by investment bank Goldman Sachs, newly opened Chinese car plants are the most robotized of such facilities worldwide.
The "corner overtaking" strategy of new energy vehicle
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.
The strategy is 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 globe market share.
The steps towards world leader (2020-present)
Establishment of technological superiority
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 a true rival for Western brands. Chinese automakers have established the building blocks for future competitiveness in EV technology, software, digitalization, factor cost and supply chain areas.
"Reversed" joint ventures of Western manufacturers
China's domestic brands are 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.
As in the 1990s, Chinese automotive manufacturers sought Western technology for joint ventures, a reversal occurred in the 2020s. Western manufacturers, began seeking technological support from Chinese manufacturers to establish joint ventures. Dozens of Chinese EV startup ventures have raised with technological advantages which attracted the investment from traditional western auto giants. Renault-Nissan, VW, BMW, Mercedes-Benz, Toyota and Stellantis.
In 2017, Renault-Nissan and Dongfeng decided to set up a joint venture call "eGT New Energy Automotive" to produce A-segment EV.
In 2019, Mercedes-Benz announced the establishment of a joint venture partnership with Chinese automaker Geely. Geely acquired 50% of Smart brand to produce EV based on Geely's SEA platform.
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.
In 2020, Toyota announced its joint venture with Chinese battery giant BYD, to provide battery for Toyota's EV. The joint venture supplied the battery for Toyota bZ3, the first electric sedan of Toyota.
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.
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.
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.
Suppression 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.
Professor Jim Saker, the president of the Institute of the Motor Industry in the UK, describe the Chinese car in UK as "invasion by trojan horse" and alleges there are "major security issues" with Chinese cars, that "paralyzing a country."
In September 2023, European Commission President Ursula von der Leyen announced EU would launch an anti-subsidy investigation into Chinese electric vehicles, claimed "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", 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."
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. However, after Stellantis invested 1.5 billion Euro to acquired stakes of Chinese startup venture Leapmotor in 2023, he defended Chinese automobiles presence in globe 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" and "Stallantis could benefit from "Leapmotor's competitiveness both in China and abroad".
Alternative fuel 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. Major cities like Beijing and Shanghai already require Euro-3 emission 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.
The Chinese Automotive Industry Plan, announced on the main Web site 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. 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. 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.
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. , 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%).
, 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. China also is the world's leader in the plug-in heavy-duty segment, including electric buses, plug-in trucks, particularly sanitation/garbage trucks.
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. 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. 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.
The country has a significant benefit over others. Some two-thirds 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. In October 2018, Tesla purchased land for the construction of an EV manufacturing plant in Shanghai's Lingang area. 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. Toyota Motor had already launched sales of an EV branded under Guangzhou Automobile Group; the two companies have a joint venture in China.
Sales
In China, authorized car dealership are called 4S car shops. The 4S represents Sales (整車销售 ), Spare parts (零配件), Service (售後服务) and Survey (信息反馈).
In most cases, brand-name new cars can only be purchased from 4S shops. For new cars in high demand, a high premium is added for instant delivery or just placing an order.
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.
There is no regulation by either the government or associations but some retailers are members of the China Automobile Dealers Association (CADA).
Exports
, 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 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.
Most of cars manufactured in China are sold within the country; in 2011, exports totalled 814,300 units. China's home market provides its automakers a solid base and Chinese economic planners hope to build globally competitive auto companies that will become more and more attractive and reliable over the years. In 2017, the country exported roughly 891,000 vehicles. 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.
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. 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.
Controversies
Copying claims controversy
Several Chinese car makers have been accused of copying designs of other established companies, mainly during 2000s to 2010s. Some BYD models have historically appeared similar to those of other brands including Lexus, Toyota, Honda, Mercedes Benz, and Porsche. GM executives claimed design duplication of the Chery QQ to the Daewoo Matiz, which may extend to interchangeable parts. Jaguar Land Rover regarded the Landwind X7 as a copy of the Range Rover Evoque which lead to a lawsuit from Jaguar Land Rover, who subsequently won the case. German automaker Porsche threatened Zotye with legal action after it revealed the Zotye SR9 in 2016, which is said to resemble the Porsche Macan. The car has been described as a "complete knockoff", with many aspects of the exterior and interior resembling the Macan.
Allegations of technology transfer
In 2010, The Wall Street Journal reported that the government of China was considering plans that will force foreign carmakers to disclose their electric vehicle technology secrets in exchange for access to the Chinese huge market. Until 2017, Chinese automotive policy required that a foreign carmaker must form a joint-venture with a Chinese carmaker if the former plans to sell its electric vehicles there, with the Chinese carmaker owning 51% of the joint venture. However, since 2017, the Chinese government had indicated that it would liberalize foreign control in the automotive sector, allowing full ownership by foreign companies. In 2017, Tesla has been allowed to set up a plant in Shanghai city, a deal that would make it the first foreign automaker to open a wholly owned factory in China. In 2018, BMW had confirmed they intended to take 75% stake in their joint venture and the deal was done in 2022, which enables BMW to have the majority control of its Chinese joint venture.
In 2014 it was noted there are "stringent" and "extreme" requirements for intellectual property transfer in order to sell to the Chinese market. Imported electric vehicles are subject to high taxes and no subsidies.
See also
Economy of China
Electric vehicle industry in China
Motorcycle industry in China
Military vehicles of China
Pollution in China
Renewable electricity
Renewable energy in China
References
External links
Anderson, Greg, Designated Drivers: How China Plans to Dominate the Global Auto Industry, book talk at the USC U.S.-China Institute, 2012.
China Association of Automobile Manufacturers
Statistical Information Network of China Association of Automobile Manufacturers (in Chinese)
China Society of Automotive Engineering
China Automotive Technology and Research Center
China Council for the Promotion of International Trade Branch of the automotive industry
China National Automotive Industry International
China Corp. 2015 - Auto IndustryDCA Chine-AnalysePublished May, 2015