To The Moon

In recent years, we could see that China has produced quite a number of incumbents for the Electric Vehicles makers market. This is not by any coincidence as over the past decade, China has emerged as a prominent player in the global electric vehicle (EV) market.

This can be attributed to China’s early recognition of the significance of electromobility for the future and government support for the sector, coupled with considerable control over the mining and processing of raw materials used in battery production. These has provided a key factor for China in the EV market.

If we look at the Top Auto Brands in the world in EV sales for January 2024, we could see $BYD Co., Ltd.(BYDDF)$ came in Top and there are 6 China brands among the Top 10. This would mean that there are more exports from China EV makers ever.

EU Imports Of Chinese-Made EVs RIsing

Another region which would be important and interesting to watch is EU. The shift to electromobility is presenting challenges for Europe. Chinese-made EVs imports are set to rise dramatically in the EU, threatening European manufacturers.

The Central European countries (Czechia, Hungary, Poland, and Slovakia), which have been highly dependent on the manufacturing of traditional internal combustion engine cars, with regional supply chains chiefly centered around German automakers, stand to be particularly affected.

But we can see that the BEV and PHEV sales for 2023 for Europe have been higher than North America, this could be due to Chinese companies increasingly interested in investing in local manufacturing to better penetrate the European market.

We might argue that this could create a mixed complicated situation of threats and opportunities for local economies. 

How China Manage To Dominate The World Of Electric Cars?

China became a world leader in making and buying EVs. The momentum has not slowed down as we can see that In just the past two years, the number of EVs sold annually in the country grew from 1.3 million to a whopping 6.8 million, making 2022 the eighth consecutive year in which China was the world’s largest market for EVs. For comparison, the US only sold about 800,000 EVs in 2022. 

Moreover with the generous government subsidies to support for lithium batteries, these are key factors we should look out for the growth and dominance in the EV sector.

This dominance in the EV sector has not only given China’s auto industry sustained growth during the pandemic but boosted China in its quest to become one of the world’s leaders in climate policy.

BYD Top The Global EV Sales By OEM/OEM Group For 2023

As we have seen how BYD have been fighting neck-to-neck with Tesla in terms of EV volumes in 2023, and there have been a clear distinction as seen by the volume of PHEV in 2023 by BYD, this got to show that consumers are still very much geared towards PHEV, not fully committed to BEV yet.

I believe this trend should continue into 2024, and there have been many new brands from existing traditional car makers as well as some new players.

State of China’s EV Market Now

China now has an outsize domestic demand for EVs: according to a survey from the US consulting company AlixPartners, over 50% of Chinese respondents were considering battery-electric vehicles as their next car in 2021, the highest proportion in the world and two times the global average.

Chinese consumers are spoilt with a slew of Chinese-built options - BYD, SAIC-GM-Wuling, Geely, $NIO Inc.(NIO)$ , $XPeng Inc.(XPEV)$ and $Li Auto(LI)$ .

BYD, SAIC-GM-Wuling, Geely had successfully made the switch to EVs early on, where NIO, XPeng, Li Auto are pure EV startup build from ground up.

And the rise of these companies (and other Chinese tech behemoths) coincided with the rise of a new generation of car buyers who do not see Chinese brands as less prestigious or worse in quality than foreign brands.

Summary

With the rise of these Chinese EV maker, they have shown resilience amidst a tight market, and they have a market to fall back. Moreover the strategy they have deployed does work, they go to region to partner to make market share.

So it is not only dominance, it is more of a win-win situation if you truly want to capture a bigger pie of the EV sector. This might be something that some US EV startup which has went bankrupt can learn from.

Appreciate if you could share your thoughts in the comment section whether you think Chinese EVs would continue to rise and capture market over the next decades?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.