Practically the entire global automotive industry seems to be transitioning more quickly now from gas to electric cars, but there's still a long way to go. However, that's not necessarily the case in China, the largest automotive market in the world, where domestic automakers and many consumers are embracing EVs. Foreign car brands that haven't adequately prepared may lose big.
While we may often hear that legacy automakers, including GM, Volkswagen, BMW, and Mercedes-Benz are beginning to move forward much more quickly with their plans for an EV future, it may be too little too late. Meanwhile, Japanese automakers, such as Honda and Toyota are just beginning to accept electric cars as a viable option going forward.
Many of these foreign legacy automakers are a strong force in China and have been for years, but it seems that's about to change in a big way. They stand to lose market share to the likes of BYD and other domestic Chinese carmakers that are arguably much better equipped for the shift.
According to a Greenpeace report shared by South China Morning Post, the world's largest automaker, Volkswagen, stands to lose 3 to 7% market share in China by 2030. GM could lose 3 to 6%, Honda 2 to 4%, and Toyota 1 to 3%. Greenpeace campaigner Bao Hang shared:
“Toyota, Volkswagen and other carmakers that have been slow to embrace electric vehicles face significant loss of market share, even under the most conservative estimates."
While the aforementioned carmakers watch their market share slip away in China, Greenpeace estimates that BYD will see a 4 to 5% gain over the same period. BYD sold 1.8 million low- and zero-emission vehicles in 2022 alone. While many were fully electric cars, many were also plug-in hybrid electric vehicles (PHEVs), which still have a gas engine, though BYD is putting an end to PHEVs in favor of BEVs.
In the first quarter of 2023, 31% of all car sales in China were electric cars. That's up 3% year-over-year and more than double the number sold during the same quarter in 2021. What's more, 80% of those sales were made by domestic automakers. And, nearly half of all types of cars sold in China in 2022 were produced domestically, which marks a 5.4% increase compared to 2021.
In addition to BYD, there are a host of local brands producing EVs in China, including Chagan, GAC, Geely, NIO, SAIC, and Xpeng. Tesla is also producing and selling cars in China, though its local factory is also manufacturing many EVs for export. The US EV maker's cars are pricier than Chinese rivals, but Tesla has been aggressively cutting prices and ramping up sales this year.
Is it safe to say the future of autos is electric? It certainly seems that way, especially in China, which is setting the stage for the rest of the world.
