In 2021, Chinese automakers sold more than 1.85 million units in the overseas market, hitting a significant milestone just two decades after China joined the World Trade Organization in 2001.
Beijing’s efforts to make China an auto superpower and the long-term strategy of betting on electric vehicles are starting to pay off. China made up almost 60% of the electric vehicles exported globally in 2021, with the annual shipment of passenger EVs nearly tripling to more than 310,000 units. Analysts expect this momentum to continue, with China on course to surpass Germany as the world’s second-biggest exporter of automobiles by volume this year, just behind Japan.
However, with European and American automakers catching up to China’s success in an increasingly crowded EV field, convincing global consumers to buy China-made vehicles continues to be an uphill battle. Chinese manufacturers, known for churning out cheap, humble cars for developing regions, are struggling to move upscale and compete head-to-head against long-established European car giants for a share of the premium segment in the latter’s home market.
A look at a few carmakers that have been ushering in a wave of EV adoption in China gives a sense of how the global auto landscape might be transformed in the next couple of years. As the world, particularly Europe, reaches a critical period in its energy transition, the localization of an entire EV industrial value chain will be vital for Chinese carmakers to become a global force that upends existing significant players, according to analysts.
State-owned brands SAIC and Chery are China’s most significant car exporters, with the pair jointly accounting for nearly half of the country’s vehicle sales to overseas markets in 2021.
Morris Garages (MG), the iconic British car brand acquired by SAIC in 2008, is currently the most significant contributor to SAIC’s success. Birmingham-based MG booked sales of over 470,000 vehicles globally last year, at least 10% of which were delivered in Europe.
Another SAIC’s sub-brand, Wuling, is also increasingly gaining popularity globally. Wuling produced the top-selling EV model in China last year, the Hongguang Mini EV. Wuling’s overseas shipments reached an all-time high of 146,000 vehicles to over 40 nations in 2021.
Anhui-based Chery is one of several Chinese carmakers that made early moves to explore global markets, exporting 10 sedans to Syria back in 2001, when China was just about to join the World Trade Organization. Having established a presence in more than 80 countries with 10 manufacturing plants and 1,500 dealership stores, the country’s top passenger car exporter mainly operates in Brazil and Russia, with sales of over 37,000 and 40,000 vehicles, respectively in the two countries last year.
Chery is also the Chinese manufacturing partner of Jaguar and Land Rover. It has plans to expand its reach in Europe and the US by selling its own-branded vehicles in the two regions, chairman Yin Tongyue said in May 2020. Although few details related to this move have been revealed thus far, the company expects its car exports to nearly double to 500,000 vehicles by 2025.
Private auto giants
Great Wall Motor and Geely are the only two homegrown private automakers in China who ranked in the top 10 by export volume in 2021, with shipments of over 143,000 and 115,000 vehicles overseas, respectively. The two automakers are pioneers of Chinese assemblers’ overseas expansion in the era of gasoline-powered cars. They have been expanding their sales networks and manufacturing presence abroad significantly in the last two years, focusing on Europe and countries connected to China’s Belt and Road Initiative.
One of China’s top-selling SUV manufacturers, Baoding-based Great Wall Motor, posted significant growth overseas last year, with shipment volume rising 104% from 2020 and accounting for about 11% of the firm’s total sales, a result of its accelerating push into overseas markets. The Chinese automaker sped past several milestones in 2021 amid a rush of positive news, such as the acquisition of a former Daimler plant in Brazil last August, followed by the launch of its regional headquarters in Munich, Germany three months later.
Great Wall also saw its second overseas plant begin operations in Rayong, Thailand, in June 2021 with a capacity to build 80,000 vehicles annually, two years after the automaker started production of its popular Haval-branded crossovers locally in Russia. The company is on track to launch an electric compact car under its Ora marque, which targets young female buyers, and a plug-in hybrid SUV under its premium EV brand WEY in Europe this year, Reuters reported last September.
The export volume of Geely’s domestic plants increased by 58% year-on-year and accounted for 8.6% of its annual sales in 2021, compared with a growth rate of 25% and a 5.5% share of total sales in 2020. The company’s footprint now covers 28 countries, with entries into Laos, Egypt, and three other states last year.
Like SAIC, the Zhejiang-based automaker expanded in Europe through partnerships with locally-based players, launching a car brand called Lynk & Co in late 2016 and forming a joint venture with subsidiary Volvo to sell the vehicles globally a year later. Reporting deliveries of 25,167 Lynk-branded vehicles overseas in 18 months as of June, the automaker operates eight retail stores in Germany, Italy, Belgium, Sweden, and the Netherlands, with plans to enter France and Spain this year.
Rising EV upstarts
Chinese EV upstarts Nio and Xpeng are still a long way from catching up in overseas sales with traditional Chinese auto giants, but they have pioneered new approaches to going global. For example, the Chinese EV startups are opening direct stores and service centers in European countries to build a strong brand image with quality service, something that has never been done before by a Chinese car brand on the continent.
Located at Oslo’s center of commerce and culture and opening to the public last October, Nio’s first showroom in Norway is as much planting of the company’s flag as an entry into the European market. Called Nio Houses, the two-story, 2,100-square-meter location is not only built for potential customers, but also serves a range of functions with a café, a library, and a living room for car owners on site, hoping to win over wealthy local customers.
So far, the eight-year-old EV maker is seemingly on the right track with deliveries of 327 ES8 crossovers, priced above NOK 609,000 (around $69,300), in Norway in the first four months of this year, which means the brand has already surpassed last year’s total of roughly 200 cars. The company also has plans to enter Germany, the Netherlands, Sweden, and Denmark with the same strategy later this year and to expand its footprint to 25 countries by 2025.
Xpeng has also aggressively pushed ahead in Europe’s booming EV market and currently operates three flagship showrooms – located in Denmark, Sweden, and the Netherlands – in addition to selling vehicles through local car dealerships in Norway since December 2020. The company delivered 486 units of its P7 sedan and G3 sports utility vehicle in Europe last year, while that number reached 426 units for the first four months of this year.
However, multiple supply chain disruptions, including semiconductor shortages and soaring battery material costs, are hitting the company’s growth trajectory. The Alibaba-backed EV maker stopped taking orders for its mainstream P5 sedan in Europe in late June, citing supply chain issues.
The world’s transition to clean energy and carbon neutrality – and China’s head start in EV production – has opened up new opportunities for Chinese carmakers to become globally competitive players in electric mobility. European Union countries reached a deal in June to completely phase out internal-combustion vehicles by 2035, a target that Japan and Canada have also set; the timetable for the UK is 2030.
Experts have urged Chinese automakers to invest more to build their own supply chain networks overseas along with parts suppliers and, therefore, better leverage their technology and expertise globally, rather than just offering direct exports.
There is no easy route to performing successfully on the global stage, but it would be wise to seize the chance when it comes – and China’s EV makers seem well poised to do so.