Chinese EVs Flood Global Markets as Beijing Elevates Autos in Export Strategy

Chinese carmakers are flooding the world with new energy vehicles (NEVs), except for the United States, where strict policies have been implemented to counter Chinese government subsidies that give EV makers a competitive advantage. This export push is part of a broader strategy by Beijing to make automobiles the cornerstone of its export engine.

New energy vehicles, as they are called in China, refer to battery-powered electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEVs).

“Backed by regional trade agreements and electric vehicle (EV)-friendly policies, Mexico and Southeast Asia emerged as China’s fastest-growing export destination markets,” the report says.

Meanwhile, fueled by competitive pricing and solid supply networks, Chinese EV brands continue to gain market share in Europe, the report notes.

According to data solutions provider DataForce, the number of Chinese PHEVs sold in Europe in the first quarter “skyrocketed” by 368 percent year over year.

The paper also listed “actively supporting the export of energy-efficient and new energy vehicles” as one of its key policies.

Favorable overseas policies such as Europe’s fuel vehicle phase-out deadlines have prompted automakers to accelerate their transition.

Analysts say generous government subsidies have enabled Chinese EV manufacturers to expand rapidly overseas.

“Extensive government support has allowed Chinese green manufacturing industries to scale up rapidly and to start dominating the Chinese home market and increasingly also foreign markets,” the paper says.

“This is true for solar panels or batteries for EVs, where Chinese companies have dominated the EU markets for several years now, and increasingly also for BEV and wind turbines, where Chinese companies are only just starting to penetrate EU markets.”

According to the paper, in 2022, government subsidies to EVs totaled approximately 5.3 billion euros ($6.20 billion), averaging  2,300 euros ($2,670) between 2010 and 2020 and 1,300 euros ($1,510) in 2022, providing them with a competitive edge against their non-Chinese peers.

The Chinese company BYD was by far the largest recipient of these subsidies, which in 2022 alone amounted to 1.6 billion euros ($1.87 billion) in purchase subsidies.

Another feature of the Chinese subsidies is that they are provided to domestic producers, thereby discriminating against nondomestic producers.

The automotive data provider outlined BYD’s expansion strategies in Europe—including diversifying its vehicle lineup, targeting both cost-sensitive and high-end consumers, shifting strategically toward plug-in hybrid vehicles, and rapidly expanding production capacity, as demonstrated by its deals in Hungary and Turkey.

Valdis Dombrovskis, the European Commission’s executive vice president for trade, said at the time that “by adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base.”

However, the additional tariffs do not apply to plug-in hybrid vehicles, leaving a loophole that Chinese manufacturers could exploit.

“What’s especially notable is that some European countries, such as Germany, have included plug-in hybrids in their ‘green vehicle’ subsidy programs, providing opportunities for Chinese plug-in hybrids to break into the high-end market,” Cui Dongshu said in his column.

Georgios Koimisis, associate professor of finance at Manhattan University, said that “Europe’s aggressive climate policies, along with incentives for EVs and openness, have boosted demand for Chinese automakers such as BYD and Geely.”

The U.S. market is quite different for Chinese electric car manufacturers.

Up to now, BYD has not sold passenger electric vehicles in the United States. According to an earnings call transcript obtained by Reuters, the company aims to double its overseas car sales to more than 800,000 units this year. However, Chairman Wang Chuanfu stated that BYD has no plans to enter the U.S. market in the short term due to geopolitical issues.

BYD’s North American operations focus on electric buses and commercial vehicles. The company has been supplying electric buses to several U.S. cities, including Los Angeles and San Francisco.

America’s harsher tariff on EVs was likely shaped in part by its experience in the late 1970s, when a surge in low-cost Japanese automobile imports challenged the domestic auto industry and contributed to rising trade deficits and tensions between Washington and Tokyo.

Alex Black, chief marketing officer of EpicVIN, told The Epoch Times that Chinese car makers face a much harder situation in the United States.

“They have a Chinese auto tariff, no federal EV tax credit, and considerable consumer skepticism about unfamiliar brands. They possess technology and scale, but without local assembly or dealer networks, entering the American market is a long-term strategy.”

Koimisis also said the U.S. market is challenging. “Prohibitive tariffs and policies designed to support domestically produced EVs, such as the Inflation Reduction Act, have effectively shut Chinese EVs out of the American market,” he said.

Meanwhile, Fanis Matsopoulos, a member of the Athens Chamber of Commerce and Industry’s executive committee, said vehicle size preference—with small and medium-sized vehicles being more popular in Europe—brand visibility, and cultural and political issues are also factors that could explain the divergence between BYD’s European and U.S. performance.

“Over the past decade, a culture emphasizing support for American-made products has taken root among U.S. consumers,” Matsopoulos told The Epoch Times.

“Simultaneously, Chinese products are often perceived as lower quality and as posing challenges to the economic and social welfare of the American people.”

.