“As China’s electric vehicle market becomes saturated, increasing domestic competition and overcapacity are forcing Chinese electric vehicle brands to look overseas,” BNEF said in a report released Wednesday.
Traditionally, Chinese automakers’ preferred approach to acquiring overseas markets has been to export key parts of Chinese-made cars to overseas assembly plants, where the cars are then assembled.
However, tariffs imposed on Chinese automotive imports in various countries, including the USA, the European Union and Turkey, mean that Chinese investments are being transformed from assembly plants into full-process production.
By 2026, production capacity will more than double
Chinese car manufacturers have built and launched full-process production plants in nine countries annual production capacity is 1.2 million vehicles from 2023.
According to BNEF by 2026, the Chinese will have more than a dozen overseas plants, whose total production capacity is expected to more than double to 2.7 million unitsof course, if all investment announcements are completed on time.
Chinese carmakers are increasing production abroad. Full processing capacity outside mainland China expected to double by 2026 / Bloomberg
Full-process production includes four main stages of car production: stamping, welding, painting and final assembly. It is capital intensive, but has a large production capacity compared to demolition assembly – notes Bloomberg.
Expansion of Chinese plants
BYD, China’s best-selling car brand, along with Chinese state-backed manufacturers – Chery Automobile, Changan Automobile, GAC Auto and SAIC Motor – announced 10 new or expanded projects for their overseas plants from 2023.BNEF reported. Popular locations include Thailand, Indonesia and Brazil.
BYD and Volvo Cars, controlled by Chinese automaker Zhejiang Geely Holding Group, drive expansion of production capacity in Europe.
BYD is building a plant in Hungary and also announced plans for another plant in Turkeywhich gives it access to the EU.
Poland, which has contracts with Chinese battery suppliersis also becoming popular among Chinese electric vehicle manufacturers. Spain and Italy they are also looking for investment. Geely, Dongfeng Motor and Xpeng are reportedly looking to locate a plant in the region.
Global reach of Chinese car manufacturers. Map of export markets and production facilities around the world / Bloomberg
Government concerns about know-how
The surge in foreign automotive investment has raised concerns in Beijing. China’s Ministry of Commerce informed automakers in July that they should protect electric vehicle know-how and prioritize assemblyand be cautious when investing in geopolitically risky countries such as Türkiye and India, Bloomberg reported in September.
