Study Suggests China Could Produce A Third Of The World’s Vehicles By 2030

Matt Posky
by Matt Posky

With Chinese automakers making headway on numerous markets, there’s a lot of speculation regarding what the industry might look like in a few years. Financial advisory and consulting firm AlixPartners has released a study exploring this, suggesting that China may represent one-third of the world’s vehicle production by 2030.


The report focuses on how Chinese brands have been making plans to move production outside the country as a possible vector for importation into the United States. Its progress on other markets is more overt, though some U.S. brands already have tie-ins that have resulted in what are technically Chinese models landing in America. AlixPartners seems to frame China’s industrial dominance as an inevitability, citing numerous reasons. .


From the study:


Supplier-OEM profit equation is flipped: Globally, automotive suppliers are reporting a 10.6 [percent] operating margin on average, trailing OEMs by nearly two percentage points, the analysis shows. In China, where OEMs are more focused on near-term market share growth, the 10.4 [percent] supplier margin outpaces OEMs by 3.3 percentage points.
Faster development, fresher showrooms: Chinese EV automakers have ripped up the playbook related to vehicle development time, creating new products in half the time (40 months vs. 20 months), mainly by designing and testing to sufficiently meet standards vs. overengineering. China-branded models, meanwhile, are 2-3 years fresher than non-China brands, averaging only 1.6 years in market.
“Made-in-China” advantage: The analysis finds Chinese brands enjoy a 35 [percent] cost advantage, affording flexibility (in Europe and elsewhere) to lower prices to offset tariffs. This advantage is built on lower labor costs and higher vertical integration from raw materials to component suppliers to final assembly to selling to other automakers. Further smoothing the path for export is the quick ramp up of overseas shipping capacity, prompting Chinese automakers to secure their own transport capacity.
Higher sales-lead conversion: Many Chinese automakers utilize a direct-to-consumer sales approach, enabling a unified and transparent customer experience. These automakers use multiple channels for marketing and sales, resulting in higher consumer engagement.


One of the most relevant factors is undoubtedly the forced transition to all-electric vehicles. With China being responsible for a majority of the world’s battery production, and having launched more EV startups than any other nation, it seems to have the most to gain by the world embracing all-electric vehicles. This also ensures that the region can field these models at a lower price point. Non-Chinese brands that are shifting to EVs likewise need to source batteries for their vehicles and this has resulted in many selecting suppliers like China’s Contemporary Amperex Technology Co.


We’ve said this for a while. But worldwide electrification seems to overwhelmingly benefit China. It's best positioned to provide the batteries and doesn’t need to adhere to the same environmental standards that Western nations have imposed on themselves to produce them — allowing the country to allegedly support the green agenda without actually having to adhere to the same benchmarks as its economic rivals.


The above could be undone by the United States placing extremely high tariffs on Chinese-made automobiles. Donald Trump has even floated this as one of his platforms in the presidential race. However, Chinese brands may be able to circumvent this by shifting production elsewhere and ingratiating with those countries by creating jobs. As an example, BYD, Chery and Great Wall Motor have all announced plans to set up factories in Mexico.


Another thing that might curtail a swelling Chinese market share would be the broader industry moving away from electrified vehicles. But AlixPartners does not see this as particularly likely. It claimed that, by 2030, the United States would see only 35 percent of new vehicles being purely reliant on combustion. Meanwhile, it predicted plug-in hybrids and purely electric cars would represent 41 percent of the market — with other Western markets seeing an even higher share of EVs.


“The trends we studied point to a world where [new energy vehicles] are increasingly dominant, Chinese brands are increasingly prevalent, and traditional automakers, suppliers, fleets, dealers, and others are increasingly pressured to reinvent,” Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners. “While we’ve long heralded the virtues of being more nimble, flexible, and adaptable, now is the time to approach those priorities with a greater sense of urgency and openness to new partnerships, operating principles, and expectations.”


The Associated Press speculated that Chinese brands could exploit existing U.S. trade agreements by shifting production to Mexico. It likewise floated tariffs or outright vehicle bans as possible solutions — noting that politicians had begun doing the same.


“Time and again, we have seen the Chinese government dump highly subsidized goods into markets for the purpose of undermining domestic manufacturing,’’ Sen. Sherrod Brown, an Ohio Democrat, wrote in a letter addressed to President Joe Biden in April. “We cannot let the same occur when it comes to EVs.’’


Brown wants an outright ban of Chinese EVs, perhaps not realizing that electrification itself overwhelmingly benefits the Asian country. It also seems to be critical of how heavily Chinese EVs are subsidized by the government, ignoring the fact that the United States has been doing the exact same thing.


[Image: BYD]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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3 of 21 comments
  • SCE to AUX SCE to AUX on Jul 01, 2024

    China, Inc. won't remain a low-cost mfr if they offshore their production, even to Mexico.


    Their products - even without tariffs - would end up costing the same as the cars already produced there and imported to the US.


    So how would this be an advantage?

    • Bd2 Bd2 on Jul 01, 2024

      Cheapest Chinese components to assemble offshore.





  • Tane94 Tane94 on Jul 01, 2024

    It's the Chinese Century, just as the 20th Century was The American Century.

  • Bob65688581 We bought zillions of German cars, despite knowing about WWII slave labor. Refusing to buy something for ideological reasons is foolish.Both the US and the EU have imposed tariffs, so the playing field is level. I'll buy the best price/quality, regardless of nationality.Another interesting question would be "Would you buy one of the many new European moderate-price EVs?" but of course they aren't sold here.Third interesting question: "Why won't Stellantis sell its best products in America?"
  • Freshblather No. Worried there will be malicious executable code built into the cars motherboard that could disable the Chinese cars in the event of hostilities between the west and China.
  • Bd2 Absolutely not - do not want to support a fascist, totalitarian regime.
  • SCE to AUX The original Capri was beautiful. The abomination from the 90s was no Capri, and neither is this.It looks good, but too similar to a Polestar. And what's with the whacked price?
  • Rover Sig Absolutely not. Ever.
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