Despite strict U.S. tariffs on Chinese electric vehicles (EVs), and more expected to be introduced under President-elect Donald Trump, China’s share of the global EV market is continuing to grow. With easy access to vast critical mineral supplies and lithium-ion batteries, as well as high government subsidies, China is now able to produce low-cost, highly competitive EVs at a faster rate than anywhere else in the world. This means that well-known automakers in other countries are finding it increasingly difficult to compete with the low prices of Chinese car makers as their new models flood the market.
China’s Growing Share of the Global EV Market
In October, China’s share of the global EV market reached 76%. Currently, most EV sales take place in China, the EU, and the U.S. Global EV sales between January and October stood at 14.1 million units, according to the China Passenger Car Association. Around 69% of these sales took place in China, which has a rapidly growing EV market. China’s market share is expected to continue growing as more Chinese companies step into the EV industry.
Tariffs Aimed at Dampening Growth
Several Western markets have introduced tariffs on Chinese EVs in a bid to make locally produced vehicles more competitive and reduce the Asian giant’s market share. In May, in the U.S., President Biden increased the tariff on Chinese EVs from 25% to 100%. President-elect Donald Trump has pledged to impose additional levies of 10% on all Chinese imports. Exports of Chinese EVs to the U.S. were reported to have fallen by around 23% between 2022 and 2024 in response to the higher tariffs.
In the EU, the bloc has imposed tariffs of 35% on Chinese EVs in addition to duties of 10%, aimed at dampening demand for the vehicles.
Increased Demand for Chinese EVs Worldwide
Nevertheless, the demand for Chinese-produced EVs continues to grow worldwide due to the broad array of offerings and highly competitive pricing. This is particularly true in the Chinese market, where the government recently increased the subsidy for car buyers for EV purchases by twofold, to $2,764 when trading in an internal combustion engine (ICE) car.
Sales of Chinese cars have also increased in Russia, by a reported 109% in the past two years. The U.S. and the EU both banned the export of cars to Russia following the Russian invasion of Ukraine in 2022.
Brazil, Belgium, the U.K., Thailand, the Philippines, and Indonesia were the biggest export markets for Chinese EVs this year, according to the China Passenger Car Association. In Indonesia, Chinese brands accounted for 43% of EV sales in the first half of 2024.
The U.S. Can’t Beat Chinese Pricing
At present, U.S.-produced EVs cost an average of $55,000, which is around double the price of Chinese-produced offerings. This is largely thanks to China’s dominance of the global critical minerals market, giving it easy access to lithium and other raw materials needed for EV manufacturing. It also has a strong EV battery market, making it cheaper for automakers to produce EVs. In addition, the government has introduced broad subsidies for EV producers, viewing the industry as one of three priority areas for China’s economic development and green transition.
In April, Sen. Sherrod Brown, an Ohio Democrat, wrote in a letter to President Biden, “Time and again, we have seen the Chinese government dump highly subsidized goods into markets for the purpose of undermining domestic manufacturing… We cannot let the same occur when it comes to EVs.”
Expanding into Latin America
Despite strict U.S. tariffs on Chinese EVs, the market continues to grow as many Chinese firms sign deals with Mexico to expand their nearshoring activities. Chinese EV makers are exploring factory sites in the northern Mexican states of Durango, Jalisco, and Nuevo Leon to expand to the growing Latin American market. Latin America’s EV market revenue is expected to reach $41.3 billion this year and achieve a CAGR of 8.49% between 2024 and 2029.
Chinese EV maker Build Your Dreams (BYD) surpassed Tesla as the world’s largest seller of EVs in 2023. Brazil has become BYD’s biggest overseas market, and Mexico is quickly catching up. BYD is expected to confirm details of its planned manufacturing plant in Mexico by the end of the year, which will produce approximately 300,000 units a year and create over 10,000 jobs. Jorge Vallejo, BYD’s general director in Mexico, recently stated that he expects BYD to sell 50,000 EVs in Mexico this year, and 100,000 in 2025.
In addition to breaking the Latin American market, Chinese EV makers are also using Mexico as a backdoor to the U.S. market. The United States-Mexico-Canada Agreement (USMCA) free trade agreement allows companies that manufacture products in Canada or Mexico and can prove that the building materials are sourced locally to export goods to the U.S. virtually duty-free.
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