Foreign brands have long ruled the auto markets in Mexico and Brazil. Nissan is a top choice for shoppers in Mexico while in Brazil Fiat was the top-selling brand last year. Shoppers in both countries, however, are now increasingly considering cars from another country: China.
China’s rising auto industry has long been accused of planning to “take over” the overseas markets with advanced electric vehicle technology and an iron grip on the battery supply chain. This has led to accusations of “dumping” cars into foreign markets to compete in unfair ways. But if a takeover is happening anywhere, it seems to be happening in the global South; as of April, Brazil surpassed Belgium as the top export market for Chinese EVs.
As sales in their home market slow, Chinese automakers—all of whom have staked their future on electric vehicles and plug-in hybrids—are looking to overseas markets to boost sales. And while the Chinese brands’ inroads into Europe may make up most of the headlines in the West, two of their biggest targets are Latin America, as well as Southeast Asia countries like Thailand and Indonesia.
*Chinese brands captured nearly 10% of the passenger vehicle market in Mexico in 2023 and their market share there continues to grow. *
Meanwhile, in Central and South America, Alix Partners expects Chinese brands’ market share to nearly triple to 28% by 2030.
*Under the terms of the U.S.-Mexico-Canada Agreement, the trade deal that replaced NAFTA in recent years, Chinese EVs produced in Mexico would be able to enter the U.S. market tariff-free if they meet certain North American content requirements. *
But that has been thrown into doubt as the U.S. government debates creating laws specifically to block Chinese brand EVs from entering the U.S. from Mexico.
Ford & GM world sales and market share has been on the decline for years. That trend is likely to continue.
Chinese EV growth into SE Asia market threatens Japan hold there.
That would probably be the ban on Chinese “connected car” systems. There was an announcement, a few weeks ago, such a ban was being studied. Banning Chinese in-dash video games would keep all Chinese cars out of the US, both EV and ICE.
BYD has a higher overall gross margin (i.e., cost of goods sold vs. what you sell them for) and much higher when just looking at automotive gross margin, excluding regulatory credits. BYD invests more in R&D and employs by far the most R&D engineers of any automaker.
According to the analysis’s source, China’s BYD is the largest electric car company or Tesla is… BYD makes hybrids. If that is the yardstick, BYD is ahead. BYD’s threat is more significant to legacy US car companies than it is to Tesla.
According to Bloomberg, “After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year.” Even in its best years of the 1960s, Detroit could not make a similar claim.
BYD has already cut sharply into Ford and GM in China. China was once among Detroit’s most profitable markets. US car companies in China were JVs with local companies. Detroit’s gas-powered brands did remarkably well. As the Chinese consumer has quickly moved to EV purchases, Ford and GM will not regain their market share and have begun to lose money. There is even speculation that GM will leave China altogether.
China is the #1 EV market space.
I question how long the Chinese EV makers will have a 100% tariff barrier in USA. Once Americans see others in the world benefiting from good $20-$25k EVs; pressure upon Congress critters to ease the tariffs so USians can also benefit. Re-elect trump legacy automaker’s campaign contributions. Then pressure upon legacy automakers will really mount.
The question is whether any Chinese auto company is currently making a profit from $25k EVs with performance that westerners would be interested in. I’m guessing not.
If we assume that the Corolla is the minimum performance standard for a mass market automobile then I think the lowest COGs BEV that meets/exceeds that standard is the Model 3 that is produced at a cost of about $30K USD.
I have seen no evidence that any company can sell a Model 3 level BEV profitably for $25K, not even BYD. This is what Musk said in Q3 conference call:
"…In fact, I think if you look at EV companies worldwide, to the best of my knowledge no (other) EV companies are even profitable. And…to the best of my knowledge, there was no EV division of any company, of any existing auto company, that is profitable,”
If you can’t make a profitable, competitive $25K BEV then there is a limit as to how many of these you can sell at that price. I suppose BYD might be able to do this if it subsidizes these sales with profits from its hybrid and battery businesses, but would it want to?
Battery costs are coming down rapidly. As EVs scale and numbers increase, $25k will be profitable (if not already). These are economy cars, good for a starting family.
Oh I agree. I’m just saying it is not the case today. Tesla might be able to do it in a year if that was its focus, but I think even BYD is a couple of years away.
BYD sells the Atto3 in China for $19K USD. In Europe it sells for $40K. I suspect the Atto 3 production cost is closer to $40K than $19K.
Twice a month, Yole SystemPlus analysts share the noteworthy points from their automotive Teardown Tracks. Today, Benjamin Pussat, Technology & Cost Analysts at Yole SystemPlus, part of Yole Group, takes us to the heart of BYD’s all-in-one high-voltage powertrain, the most integrated electrification system on the market.
From the stand-alone units of 10 years ago to today’s most commonly used 3-in-1 Integrated Power Unit and e-axle, BEV high-voltage integration continues its unbridled progress. On this point, Chinese OEMs are at the helm. Chang’an and Leapmotor already offer 7-in-1 systems. BYD goes a step further by additionally embedding the BMS (battery management system) in the box(1). Thanks to strong incentive policies followed by penalizing regulations (dual-credit mandate), the share of EVs reached 27.6% in China in 2022 whereas it was 0% a decade ago.