The Globalization Path of China's Electric Vehicles


Chinese new energy vehicle makers are expanding overseas factories, especially in places with stable supply.

More than 1,000 years ago, the lifeline that linked China to the lands of West Asia and Europe was a trade route for silk and ceramics. Today, the legendary Silk Road that originated in Xi’an, Shaanxi Province, China, is shifting to trade in new energy products, led by electric vehicles.

Green transformation solutions

According to China Daily , thanks to cost savings, improved quality and good after-sales service, China's new energy vehicles (NEVs) are becoming the choice for green transformation solutions in many countries and occupying a large market share, especially in developing economies. In recent times, many Chinese electric vehicle and auto parts manufacturers have accelerated the expansion of many overseas production facilities to meet the growing demand.

Western media and politicians have described this as overcapacity and have accused China of dumping its products overseas. China has countered that its growth has not only spurred a global green transition, benefiting consumers by cutting costs, but also opened up opportunities for companies around the world.


Customers look at BYD electric vehicles at a dealership in Yunnan Province, May 2024. Photo: China Daily

Fu Bingfeng, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM), said that the high export volume of Chinese-branded vehicles is due to the improvement of product quality, technology and services. In the first two months of this year, China exported about 831,000 vehicles, up 21.9% year-on-year, including 285,000 new energy vehicles, up 11.1%. In response to the "overcapacity" accusation, Fu said that China's NEV factory capacity utilization rate is currently at a reasonable level of more than 70%.

"Consumers favor Chinese NEVs because they fill a market gap. This development can also serve as a policy or technology reference for the world's NEV development process in general, thereby contributing to global green development," he emphasized.

Norbert Wiest, CEO of SW China, a subsidiary of German machinery manufacturer SW, said: "It makes sense for China's auto industry to go global. History has shown that every influential and rapidly growing economy has ventured out of its comfort zone. In the process of developing its auto industry, Japan has expanded its global reach, and German OEMs have also achieved considerable success exporting to China."

According to Wiest, the competitive prices of Chinese products come from advanced technology and large-scale production. Currently, many of SW’s customers in China are tier-1 suppliers to OEMs. In the past two years, SW’s Hungarian branch has seen a boom in business, largely due to orders from Chinese auto parts manufacturers with production facilities in the country. Meanwhile, about 40% of SW’s global revenue in 2023 will come from Chinese orders.


Visitors look at SW products at a machinery exhibition in Shanghai, China, April 2018. Photo: China Daily

In addition to SW, EMAG Group – a German machine tool manufacturer – also said it will exploit opportunities from China's growing NEV market with an investment of several million euros over the next 3-5 years. Markus Clement, Global CEO of EMAG Group, assessed that China is playing an important role in shaping EMAG's global structure and the company is ready to support Chinese partners in domestic and international markets.

The comments come as Chinese automakers face major challenges, including an EU investigation into Chinese government subsidies for electric vehicle makers. In May, the US government decided to impose additional tariffs on Chinese imports of electric vehicles and lithium batteries, in addition to existing tariffs. Starting this year, the US will also increase tariffs on electric vehicles imported from China from 25% to 100%.

Analysts say that although China's share of the US NEV market is relatively small, Washington is concerned that rapid growth could pose a threat to its competitiveness.

From Central Europe to the world

Chen Shihua, deputy secretary general of CAAM, explained that with the current de-globalization and complicated geopolitical situation, foreign customers, whether dealers or manufacturers, will pay more attention to supply chain security than cost. They will prioritize NEV or auto parts suppliers with manufacturing capabilities in convenient locations.

This trend is pushing Chinese automakers and parts suppliers to expand into international markets, with Central Europe and Mexico seen as important destinations.

Central Europe, Serbia and Hungary are considered to have strategic locations, favorable policies and efforts to attract partners. With the implementation of the Serbia-China free trade agreement, more than 90% of trade between the two countries will be duty-free from July this year; the first sectors to benefit will be automobiles, lithium batteries and solar power.

Meanwhile, low corporate taxes, a welcoming policy for foreign investment, and the pre-existing presence of German car manufacturing facilities also make Hungary an ideal destination. Chervon-Auto, a Shanghai-listed auto parts manufacturer, marked its presence in Hungary with an investment of approximately $129.8 million in 2021 and plans to complete its plant there in 2023.

"Orders from overseas usually account for about 40-50%, of which about 80% come from Europe. In order to understand and promptly meet customer needs, it is necessary to establish overseas production bases," said Shi Jiaqi, Chervon-Auto's overseas project manager. Within 3-5 years, the company plans to open a research and development center in Hungary to meet the needs of customers in the European region.

Just as the US, Germany and Japan moved their supply chains overseas decades ago, Shi believes globalization is a necessary move not only for Chinese automakers and parts makers but also for other companies around the world.

Zhejiang Shuanghuan Driveline, a Shenzhen-listed auto transmission maker, has also invested $132 million in its first phase project in Hungary.

"Our top priority is a stable investment environment, even if this means higher logistics costs. Cultural similarities help us implement an efficient management system. In addition, Hungary plays a central role in the eastward shift of European manufacturing. Many major manufacturers such as Audi and BMW are also setting up factories in the region," explains Wang Binlian, who is in charge of the company's overseas projects.



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