Xi Jinping (successfully) stimulated EV and semiconductor manufacturing through massive government investment and loans. The problem is that so many companies were funded that they are now viciously driving each other out of business through oversupply.
Because the supply chain networks are so dense, each bankruptcy easily cascades because the company then defaults on contracts with vendors and customers.
None of this, of course, is good news for US competitors like Tesla. With such a large field of vicious competition, it’s almost assured that the small set of businesses that succeed will be able to outcompete globally with extremely low cost structure. We see this happening with BYD.
Other than BYD (which has a strong product market fit and a very strong technical foundation in both battery tech and automotive development), where can the competition export?
Every major automotive market has preemptively or actively placed tariffs on Chinese automotive exports straight from China.
SAIC, GAG, GAC, BAIC, BYD, etc will all have to either ToT IP, open domestic factories, or create JVs in order to enter most markets.
BYD completely owns the Chinese EV market in absolute numbers - and the competitors had to preemptively begin exporting abroad, which sparked trade wars and worries of dumping, which made it harder for BYD and other players to export "Made in China" cars
You see, there is a 1.5m-2m new car market right next to China, completely abandoned by western players. And another 500k-1m market in Central Asia, where General Motors neocolonialist monopoly is waiting for disruption.
Of course it's not US or EU-sized market, but realistically, in the best case scenario I'd expect China to have at most 20% of US or EU. Here, they can take it all.
Which one? If you mean Russia (which by the way is only 600-700k), then those Chinese players face secondary sanctions in most markets which settle trade in USD, along with a lot of politically connected domestic players.
If you mean India, most Chinese players have been chased out or forced to transfer technology and majority ownership to Indian companies (eg. SAIC MG Motors India now being majority owned by JSW Group). Also, the dominant foreign players are Japanese and Korean with massive Indian government backing.
If you mean VN, ID, MY, or PH, then it's South Korean and Japanese JVs that have a dominant position along with govenenent backing.
> another 500k-1m market in Central Asia
Which is dominated by a mix of American (GM) and South Korean (Hyundai) JVs with UzAutos, Russian automotive players, and Japanese JVs with Pakistani+Indian players (eg. Toyota x Pakistani Army)
Yes.
> (which by the way is only 600-700k)
700k was the official figure for 2022, which, besides the obvious reasons to be an outlier, is also skewed by the fact 300k more cars were imported as "used" to workaround stopping of the official deliveries. It was more than 1m new cars sold in 2023, now it's 700k just for the Jan-Jun 2024.
> then those Chinese players face secondary sanctions in most markets which settle trade in USD
Yet the reality shows they don't really care much. Why should they, though? The big ones have the leverage of controlling the access to the Chinese domestic market, which is too important for the Western manufacturers. And the small ones are already effectively excluded (by the tariffs and such) from the markets that can implement secondary sanctions.
> Which is dominated by a mix of American (GM) and South Korean (Hyundai) JVs with UzAutos
There is no economic reason why GM dominates that market. GM produces too little cars, of a questionable design age and quality. The day someone is able to talk local government into a deal with favorable tariff conditions (not circa 100% import tax that exists now), GM business in Central Asia is dead.
UzAvtosanoat (the Uzbek govt manufacturer) is the largest automotive manufacturer in Central Asia, and because every single Central Asian country has a FTA with Uzbekistan this puts them at a massive advantage.
It is UzAvtosanoat that manufactures GM, Hyundai, and other cars for the Central Asian market. Even BYD Central Asia has to partner and ToT IP to UzAvtosanoat for manufacturing and entry into the Central Asian market [0].
My point is that "Made in China" products are limited by export restrictions as every country has in place. What happens to the glut of cars "made in China" that cannot be sold abroad? This is the crux of the overproduction problem.
[0] - https://www.byd.com/eu/news-list/BYD_Signs_Investment_Agreem...