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The world's carmakers are struggling to compete with China
bbc.
Car makers worldwide face a big challenge. Brands from the US, Europe, and Japan are losing customers to Chinese rivals. Chinese firms lead in electric vehicles, batteries, and software. At the Auto China 2026 event, reporters visited factories in Beijing and Hefei. They saw highly automated plants and fast software updates. Foreign brands once controlled this market. Now, they struggle to keep up. Toshihiro Mibe, Honda’s chief executive, visited a factory in Shanghai. He told Japanese media that they had no chance against Chinese competitors. Jim Farley, Ford’s chief executive, warned that Western companies are fighting for survival. For decades, foreign makers used joint ventures in China. These are partnerships where two companies share ownership. Now, they must change these deals to survive.
Bill Russo, an analyst in Shanghai, says the world makes a mistake. He believes the transition is not just about electric cars. It is about who leads future mobility. This shift changes how cars are built and used. China’s power goes beyond selling cars. China exports over 315 product categories. This number is up from 163 in 2016. Many exports link to electric vehicle supply chains. These include batteries and parts.
The International Energy Agency says making a small electric SUV in China is 30% cheaper than in advanced economies. Costs are lower for batteries and supply chains. China spent billions on state support. The EU and US criticize these subsidies. They say these financial aids distort the global market. However, the help lets Chinese firms grow and cut prices. Competition in China drives innovation. Tech giants like Xiaomi, Huawei, and Alibaba make electric cars. They bring digital tech to autos. Cars rely more on software. This gives Chinese makers an edge. Inside Xiaomi’s factory near Beijing, a new car rolls off the line every 76 seconds. Xiaomi launched its first electric car in 2024. It is already a top seller. The strategy connects cars with phones and homes. At Nio’s plant in Hefei, production is almost fully automated. BYD makes ultra-fast chargers. They add 400 kilometers of range in five minutes. XPeng’s CEO, He Xiaopeng, told the BBC that car companies will also be robotics companies. He predicts this change in the next decade.
Foreign makers rely on China for global supplies. Tesla sells Model 3 cars from Shanghai in Europe. BMW sells electric Minis made in China overseas. Yet, many foreign brands struggle in China. Their market share dropped from 64% in 2020 to 32% in 2026. This decline hurts profits for General Motors and German firms. They once made billions in China. Luxury brands face pressure too. Huawei’s Maextro S800 sedan sells well. It outsells imported Porsches and BMWs over $100,000. Foreign makers used to bring tech. Local partners gave factories. Now, the deal changes. Stellantis signed a €1 billion deal with Dongfeng. They will make Peugeot and Jeep models in China. Stellantis will also bring Dongfeng’s Voyah brand to Europe. Volkswagen pays $700 million for XPeng’s software. It needs this tech for new electric vehicles. Volkswagen admitted it could not develop it fast enough at home. He Xiaopeng says the relationship is mutual. "We study each other, so we trust each other," he said. Toyota, Hyundai, Ford, and Nissan expand research in China. They use local talent for development.
Volkswagen briefly topped sales in China in early 2026. This may be due to the end of Beijing’s subsidies. It weakened some local rivals. China’s market is cooling. Growth slowed after years of expansion. Overcapacity and price wars squeeze profits. This pushes Chinese firms abroad. BYD, Chery, and SAIC enter Europe. They face tariffs up to 45% in the EU. Chery’s Jaecoo 7 sold well in the UK. However, US tariffs over 100% block Chinese brands. Experts warn that manufacturing shifts hurt other hubs. Southeast Asia and Europe may lose jobs. Tariffs might not protect these regions. Consultant James Pearson says, "If you lock them out of one market, they will just find another." Bill Russo argues the center of gravity has shifted. Companies that collaborate have a chance. Those trying to stop China risk falling behind.