BYD was the #10 biggest selling global car manufacturer in the first half of 2023, with sales of 1.25 million. In the second half of 2023 BYD expanded its sales to 1.75 million, a 40% increase in only 6 months. It most probably surpassed Suzuki and Honda to become the global #8 in that period. With the Chinese EV market still rapidly growing, probably by 25% in 2024 after nearly 40% in 2023, and BYD’s exports rapidly increasing we can expect continued rapid growth. By the second half of next year it will most probably have overtaken Ford to become the #7 and be closing in on the #4, #5 and #6 - Renault/Nissan/Mitsubishi, Stellantis and GM. BYD is the leader of a number of Chinese producers (Geely #13, Changan #14 and Chery #17 globally in 1H 2023 with SAIC-SGW, GAC and Li in the wings) that will take significant sales and market share away from Western car manufacturers in 2024 and beyond.
Within China itself, BYD overtook VW in 2023 to become the #1 selling car manufacturer, VW sales continued the fall that has been in progress since 2019. VW’s share of the Chinese EV market fell in 2023 to 2.9% from 3.7% the previous year. The previous #2 Toyota saw its sales fall by 20% in 2023, and previous #3 Honda continued its sales fall that started in 2020. Changan came in #5, with a relatively flat market share but with its rapid increase in EV sales in the second half of 2023 it seems poised to at least overtake Honda. It was no better for the other foreign brands with Buick down 41%, Cadillac 28%, Chevrolet 55%, Citroen 44% and Skoda 48%.; with the latter two close to exiting the Chinese market. In November 2023, Chinese brands had a 60% share of the overall Chinese car market (ICE and EV), German 16%, Japanese 13% and US 8%. Given the scale of the Chinese market, the largest globally, these foreign shares still represent many millions of car sales; over 4 million for the German brands, 3.5 million for the Japanese and over 2 million for the US (over 600,000 of which are EV sales from Tesla). The loss of these sales would greatly damage these brands at the global level.
With the Chinese EV market forecast to grow 25% from just above 8 million to 11 million, with a probable end of year market share above 50%, any company without a significant share of the EV market will suffer as the overall ICE market shrinks from 60% to 50% (over an 8% decrease). This reality will only accelerate as the ICE share continues to shrink by more and more on a percentage basis. The only Western car manufacturer that has any position in the Chinese EV market is VW, but its EV sales are exceeded by a factor of 10 by its ICE sales - so falling ICE sales will continue to offset rising EV sales. Toyota and Honda have next to no EV sales in China, and with few if any upcoming EV products, stand to be the biggest losers from the reduction in ICE share. And Toyota just keeps doubling down on their losing anti-EV strategy:
So it looks as if the increases in EV market share will predominantly go to the Chinese brands with some possible increase in Tesla sales. Tesla had a 6.5% EV market share in Q4 2023, which is lower than its full year 7.5% share; reflecting its loss of market share after the Q1 2023 price-cut driven spike in sales. SAIC-SGW knocked Tesla down to third place in the EV market in 2023, and given the momentum from Q4 Tesla could well also be overtaken by Geely in Q1 2024 with rapidly growing GAC, Changan and even Huawei’s AITO exponentially growing brand in the wings. A new price war has broken out in the EV market at the start of 2024, which will both serve to increase EV sales with respect to ICE sales, and reduce margins. With Tesla’s margins wafer thin in China already, any sales growth may be profitless.
With the EV sales gain predominantly benefitting Chinese brands, those brands share of the overall market could increase to 70% from 60%, reducing the foreign brand share by one quarter; with the reduction concentrated on the biggest foreign brands of VW, Toyota, and Honda. That decrease will then intensify through 2025 and beyond. Hyundai has already experienced the plunge in China sales that is now intensifying for the other Western manufacturers, with a nearly 80% fall in sales over 9 years. Many foreign brands may be closing up shop in the biggest, and still fast growing, EV market in the world in the next few years. BYD has been buying up some of those Hyundai, and other brand’s, factories at cheap prices.
Together with the increasing encroachments of Chinese brands in Europe and the rest of the world (excl. China and the US), the European and Japanese manufacturers look to experience significant sales losses in the next few years with those losses being gains for the Chinese manufacturers. In 2023, China already overtook Japan as the largest global exporter of cars. The Chinese brands are already starting to dominate the EV space in Australia, which is the biggest market in the rest of the world, as well as other South East Asian and South American markets such as Thailand, Indonesia, Mexico and Brazil. BYD is building EV manufacturing plants in Thailand, Indonesia, Mexico, and Brazil, and other Chinese manufacturers such as SAIC, GAC, Changan and Hozon are also constructing EV plants in Thailand. In the South East Asian and South American nations the Chinese manufacturers have a decided advantage over Tesla as they have models at the lower price points that appeal to the mass market. The video below very much covers how EVs have allowed the Chinese manufacturers to leapfrog the Western lead in internal combustion energy technology, with both electric battery and electric engine technology, and how China leads in the integration of technology within EVs at lower prices.
With probable very low growth in the European EV market in 2024 (growth was only 17% in 2023) prior to the new EU EV regulations coming into place in 2025, made worse by recession and the cessation of German EV incentives at the end of 2023, increased Chinese sales will only intensify the pressure on European car manufacturers. Tesla started the year by cutting the Model Y price in Germany and other markets by up to 10%; European Model Y sales fell in each of the last three quarters in Europe. BYD building a car manufacturing plant in Hungary, together with Geely’s manufacturing plants there, will help blunt any protectionist measures taken by the EU; as well as possible Chinese retaliation against European luxury and other goods.
One of the few European EV markets that will experience growth in 2024 will be the UK one with the implementation of higher Zero Emission Vehicle mandate levels, with each manufacturer now required to sell at least 22% battery electric vehicles (BEVs) to escape stiff financial penalties. Each year that mandate ramps up to 38% in 2027 and 80% by 2030. In the fourth quarter of 2023, Chinese brands already hold the #4 (SAIC-MG), #7 (Geely-Volvo), and #11 (Geely-Polestar) sales spots in the UK, with a host of new models in 2024 and BYD only just starting to ramp up its sales. In Europe as a whole, SAIC-MG was the fastest growing car brand in the month of November.
The only area protected from the Chinese brand onslaught will be a US that has both the Trump-implemented China tariffs plus the protectionist IRA subsidies that favour domestic (and Mexican and Canadian) production. Trump, who may win the 2024 presidential election, has raised the possibility of an additional 10% across the board import tariff. One Chinese EV maker does have a US plant, Geely-Volvo, and its introduction of the affordable EX30 will increase the market competition.
Tesla has been losing BEV market share in the US over the past few years, dropping from 64% to 55% in 2023 (from 79% in 2020) - with European manufacturers providing much increased competition. If the market growth slows substantially, and Tesla keeps losing market share, then Tesla’s overall US sales may stall or even fall; requiring yet more price cuts and lower margins to drive sales.
With the US EV market still being small when compared to China and Europe, with only about 1.2 million BEVs sold in 2023, and with a declining growth rate (64% in 2022, 46% in 2023, probably around 25% in 2024), the Chinese manufacturers can bide their time. The removal of many EV models from the qualifying list for the IRA subsidies, including the Tesla Model 3, will also act to retard US EV sales. A Trump presidency may also mean the end of those subsidies. With Ford cutting EV production and hiring more workers to produce ICE vehicles, a rapid acceleration in US EV adoption seems nowhere on the horizon.
And GM is too busy doing massive share buybacks (US$10 billion!) and boosting the dividend by 33% to drive the required investments in new EV products. Its already pushed back the date for the Silverado EV and significantly cut investment in assisted driving technologies.
And even Tesla will not have a new high volume product in the US being produced at any scale until at least early 2026. The CyberTruck is very much a niche product, which will have to ramp slowly given the untried technologies required to produce a stainless steel body and the problems that Tesla has had ramping up its higher-capacity 4680 batteries; problems that is has not solved in over 2 years!
A collapsing market in second-hand vehicles also will not help the sales of new ones.
In 2023, almost 2/3rds of all EV sales were within China, and that share will most probably increase in both 2024 and 2025 - allowing the Chinese EV manufacturer share to grow from both domestic sales and exports. Even Tesla looks to have very limited opportunities for sales growth in both of those years, exacerbating the increasing dominance of the Chinese brands in the global EV market. By 2026 the Chinese brands may be both dominating global car sales and be entering the last bastion US market with North American manufacturing plants. This will represent a further massive loss of productive capacity for the West, further degrading the political-economic base upon which Western power resides. And even when the Chinese brands build North American manufacturing plants, they may be much more in Mexico than in the US.
As a story in the Mexico Daily News notes, there has been a very rapid and large build up in Chinese auto investments in Mexico. Its asks the question of what will happen with the US-Mexico-Canada free trade agreement (the USMCA) if China becomes the base for Chinese manufacturers to export cars to Canada and the US at the expense of manufacturers in those two countries.
Anyone thinking that the manufacturers of more expensive luxury and performance cars will be immune to the China brand onslaught needs to understand the cars that Chinese manufacturers are already making or plan to deliver in 2024. This is from Yangwang, the luxury brand of BYD.
Already here is the Tesla Roadster MG Cyberster.
The US$140,000 Yangwang U7 luxury sedan.
With respect to Tesla, here is an accurate take on its fourth quarter 2023 results:
The global automobile industry has massive ripple effects across the economy, being the greatest user and driver of innovation in production automation, EV batteries, electronics and even AI, together with having an extensive network of parts and raw material suppliers. The dominance of this by Chinese manufacturers will further significantly diminish the West’s manufacturing capabilities, as well as impact many other industry and service sectors. Many of the very capabilities required to effectively ramp up weapons and munitions production; with the West already being seen as lagging far behind Russia and China in the ability to ramp up such production. The sheer speed of the Chinese takeover of the global automobile industry is catching out many governments as well as geopolitical analysts.
To question where the Chinese will obtain their rare earths shows profound ignorance of the rare earth market. I agree with Roger..... China is the dominant producer/refiner of rare earths..
One important reason the Chinese are embracing BEV vehicles is urban air quality. China is home to many "mega cities" those with populations > 25 million. Most notably, Beijing itself has for many years struggled with poor urban air quality. Mass adoption of BEVs drastically reduces air pollution, and permits China to power them with it's very large renewable power system and it's increasingly large Nuclear power system.
China is pioneering TMSRs and nuclear breeders and nuclear waste consuming reactors, using it's own and ROSATOMs technologies.
I can't believe Geely actually has a plant in the US.
I highly doubt this will last for long though, you know that in a few years they'll just ban Chinese cars from the US for "security" reasons or something stupid like that. It'll go the same way as Huawei and TikTok. The "free market" is all about banning your competitors when they make a better product than you.
It's a shame too, I'm really curious about the different models coming out from BYD and Geely.