Experts expected that American electric cars would exit the Chinese market within 5 years. What are the reasons?
Manufacturers attest Electric cars Americans and international players compete fiercely in the Chinese market, as local manufacturers clearly excel in the electric vehicle sector in terms of quality and price.
As a result of this superiority, sales declined American electric cars, in China significantly, and reached its lowest levels since 2009, which threatens the exit of companies such as Ford and General Motors, from the Chinese market permanently within 5 years, according to experts’ expectations.
Reasons for the decline in American electric car sales
Chinese companies, flush with investment and government subsidies, have jumped into the competition in electric vehicle technology and software, while U.S. automakers’ sales have fallen dramatically since their peak a few years ago.
“I don’t want to sound too dramatic,” said Michael Dunn of Dunn Insights, who has studied markets in China and other Asian countries for nearly 30 years. “I just want to be realistic when I say that in the five years Next, Ford, GM, Hyundai, Kia, and Nissan will most likely be outside China, as they are no longer able to compete with the Chinese, according to CNBC.
A significant decline in General Motors sales in China
Sales decreased GM, in China, including sales of joint ventures held in Beijing, from 4 million vehicles in 2017 to 2.1 million in 2023.
Equity income for U.S. companies from the Chinese market — GM’s measure of how much it makes in its second-largest market — fell 34% for the year to $446 million, including a 54% year-over-year decline during just the fourth quarter.
Reasons for the superiority of Chinese automakers
Several factors contributed to the decline of American automakers in China.
Chinese automakers gained valuable experience from their foreign counterparts, requiring long-term partnerships with them to work in this sector.
Later, these successful Chinese companies bought foreign brands, including the British brands MG, Lotus, and Swedish Volvo.
There are also names based in China, including “BYD”, in which Berkshire Hathaway has a stake – has also seen a significant rise in outside investment.
When will companies compete with the American auto industry in China?
The Chinese market has changed dramatically over the past ten years, as the idea of the car as a computer or smartphone has become common and adopted in the country, and among the new entrants are the mobile phone manufacturers Xiaomi and Huawei.
“This is precisely why American automakers should not abandon China despite corporate sales setbacks,” said Bill Russo, a former Chrysler executive who runs Auto Mobility, a consulting firm in Shanghai.
He stressed that these changes that have occurred in recent years are an opportunity to try to survive, noting that not competing in the Chinese market represents a major challenge. He asked: “What will you do if you are not able to compete in China?” How will you learn how to compete with them? “She didn’t even make an attempt.”
Is the solution to impose dumping duties on Chinese cars?
The Biden administration is expected to raise tariffs on Chinese electric vehicle imports from 25% to 100% on Tuesday.
The European Commission is also investigating imports of electric cars from China, and is widely expected to raise tariffs in the coming months.
In China, the electric vehicle industry is highly competitive and continues to show strong growth, with sales rising more than 30% in the first four months of the year.
In the first half of April, sales of pure electric and hybrid vehicles crept into more than half of new vehicle sales in China for the first time, highlighting the decline of the internal combustion engine vehicle production industry.
The Biden administration’s tariffs are expected on Tuesday. The move comes amid growing concern within the administration that the US President’s efforts to kick-start domestic manufacturing of clean energy products could be undermined by China, which is flooding global markets with cheap solar panels, batteries, electric cars and other products.
The president is looking to increase pressure on China and show his willingness to protect American manufacturing before facing off against Trump in the presidential elections next November.
