Foreign Carmakers’ New China Worry
Bloomberg Businessweek US|September 05 - 12, 2022 (Double Issue)
Buyers in the world’s biggest electric vehicle market are overwhelmingly shifting toward homegrown EV brands
Peter Vercoe and Chunying Zhang
Foreign Carmakers’ New China Worry

For the past four decades, Western automakers have enjoyed a welcome lift from Chinese car buyers, who were drawn to the foreign brands’ quality and cachet. That allowed sales in the Asian nation to become a sizable piece of European and US automakers’ revenue and growth plans. But as China’s car buyers quickly shift away from traditional gasoline- and diesel-powered cars and toward electric vehicles, that could be changing. Homegrown auto manufacturers now command the lion’s share of new-energy vehicle (NEV) sales, leaving global giants such as Volkswagen AG and BMW AG at risk of being left behind in the world’s biggest EV market.

Domestic automakers accounted for almost 80% of EV sales through the first seven months of 2022, according to data compiled by the China Passenger Car Association (PCA). While long-established BYD Co., backed by Warren Buffett’s Berkshire Hathaway Inc., is the runaway leader, newer entrants such as Xpeng Inc. and Hozon New Energy Automobile Co.—barely known outside the country— now outsell VW’s two Chinese joint ventures.

The shift comes as China’s car market nears an inflection point, where the taking up of EVs builds consumer acceptance and supercharges growth. More than 25% of new cars sold in July were NEVs, which include plug-in hybrids and pure battery-electric cars, up from fewer than one in six just a year earlier. The PCA recently raised its 2022 forecast for NEV sales to 6 million —twice last year’s total. From there, BloombergNEF sees years of uninterrupted growth, with annual sales climbing to 22.3 million by 2040, accounting for almost a third of the global market for NEVs.

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