All eyes on EVs as carmakers eye competition at Auto Shanghai 2025
ADVERTISEMENT
Leading automakers will be showcasing their latest designed-for-China models at the Shanghai auto show this week - in a bid to stay competitive in the world's largest car market.
Some industry experts view this year's show in the sprawling industrial outskirts of Shanghai as a tipping point. Three decades after Beijing set out to build a world-class car industry, local manufacturers account for about two-thirds of sales inside China, and a growing share of global exports.
The exhibition opens to the public on Thursday and runs until 2 May.
Increased demand for EVs
Encouraged by government subsidies for scrapping older cars for the latest models, Chinese drivers have embraced the switch to electric vehicles (EVs), with sales of battery-powered and hybrid vehicles jumping 40% last year.
A total of 31.4 million vehicles including buses and trucks were sold last year in the world's biggest market by sales, up 4.5% compared to a year earlier, the China Association of Automobile Manufacturers reported.
Growth in sales of EVs was offset by falling sales of traditional gasoline and diesel-powered vehicles, which still accounted for just over half of new car sales.
Chinese electric vehicle maker BY nudged past Tesla as the world's biggest maker of EVs by sales last year, reporting revenue of over $100 billion (€87.8bn). It recently announced an ultra fast EV charging system that it says can provide a full charge for its latest EVs within five to eight minutes, about the time needed to fill up at the pump. It plans to build more than 4,000 of the new charging stations across China.
Survival of the fittest
To gain access to China's potentially huge market, foreign automakers like Volkswagen, General Motors, BMW and Ford set up joint ventures with state-owned local companies beginning in the 1980s and 90s, helping them build the capacity and technology to compete on a world scale.
They also created sprawling supply chains in Shanghai and other major manufacturing hubs, helping to nurture other big names in the Chinese car industry, such as BYD, Geely and Great Wall Motors.
Facing brutal competition at home, Chinese carmakers are expanding rapidly into many world markets, winning market share with relatively affordable sedans, SUVs and pickup trucks.
Shanghai's auto show is a gathering for the 'survival of the fittest,' Zhou Lijun, director and chief researcher of the industry analysis group Yiche Research Institute, said. It's also a turning point in that local automakers have switched from a supporting role to being the real protagonists on the world stage, he added.
That doesn't mean all the EV makers go it alone. BYD teamed up with Daimler, now the Mercedes-Benz Group, to launch its Denza premium brand, featured on billboards in Southeast Asian capitals like Bangkok.
Tariffs and other challenges
Opening markets wider to foreign competition has given car buyers a choice of more affordable, innovative vehicles. But that has been a mixed blessing for older automakers like GM, Ford, Toyota and VW that now face fiercer competition both at home and abroad.
Trump doubled down on tariffs on Chinese goods, raising them to up to 145%. His recent announcement of a 90-day pause temporarily spared many other countries including Japan from 24% across-the-board tariffs. But a 10% baseline tariff and a 25% tax on imported cars, auto parts, steel and aluminium exports remains in place.
Higher US and European tariffs on foreign-made EVs are prompting Chinese newcomers to shift production closer to those markets as more Western consumers opt for the latest Chinese models.
ADVERTISEMENT
Not that long ago, Japanese automakers were doing the same, as they fought trade friction with the United States over their own exports. Now, Toyota, Honda and Nissan employ hundreds of thousands of US workers at their US factories.
'The trade war between China and the United States has blocked direct exports from China to the United States, but it hasn't blocked local production there or the establishment of global production bases in Europe or elsewhere,' Zhou said.
But as Trump's 25% tariffs on foreign-made vehicles shows, other factors may slow that expansion.
A report by the Rhodium Group shows that nearly half the world's markets are restricting imports from China, in part because of national security concerns linked to the advanced electronics in EVs and other high-tech vehicles.
ADVERTISEMENT
About 12% of the global market is relatively open, including countries like Australia and South Africa. According to the report, Russia is a major market but is nearly saturated.
The road ahead
Chinese automakers lag behind global leaders like Toyota in conventional gasoline and diesel fuelled vehicles, but they can sell EVs at roughly the same price, while also solving the problems of range and fast charging.
China has become part of what geopolitical analyst Yanmei Xie described, in a commentary in the Japanese financial publication Nikkei Asia, as a 'technological paradigm shift.'
Automakers in China are going electric not just because of the green transition, but as a route to 'technological and industrial dominance,' she wrote.
ADVERTISEMENT
EV makers in China have benefited from not having huge legacy operations that have to make the transition, Stefan Sielaff, vice president of global design for EV maker Zeekr Group, part of Geely's stable of brands. Founded in 2021, it's selling cars in more than 80 markets including in Europe.
'Therefore they can immediately react to market demand, to customer demand, and can deliver very, very fast,' he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fashion Network
42 minutes ago
- Fashion Network
Luxury Coach bag for $30? Deflation reshapes China's luxury market
Data released on Monday showed that consumer prices fell 0.1% in May compared to a year earlier. Due to oversupply and weak household demand, price wars have erupted across sectors, including autos, e-commerce, and coffee. "We still think persistent overcapacity will keep China in deflation both this year and next," Capital Economics stated in a research note. New businesses are targeting cost-conscious consumers by offering low-priced options, including 3 yuan ($0.40) breakfast menus at restaurants and supermarkets hosting flash sales four times a day. However, economists argue that these pricing battles are unsustainable. Companies that fail to compete may close, increasing unemployment and exacerbating deflation. Since the pandemic, rising price sensitivity has fueled growth in China's second-hand luxury market. According to a 2023 report by Zhiyan Consulting, the sector recorded annual growth above 20%. This growth has also led to a surge in supply, which is reflected in deeper discounts. Some new stores, including Super Zhuanzhuan, offer products at up to 90% off their original prices, far below the industry average of 30–40% in recent years. Discounts of 70% or more have also become common on major second-hand platforms such as Xianyu, Feiyu, Ponhu, and Plum. "In the current economic environment, we are seeing more existing luxury consumers shift to the second-hand market," said Lisa Zhang, an expert at Daxue Consulting, a market research and strategy firm specializing in China. "But sellers offer more discounts because of growing competition." At Super Zhuanzhuan, a green Coach Christie carryall handbag—originally sold for 3,260 yuan ($454)—now costs just 219 yuan ($30). A Givenchy G Cube necklace that once retailed for 2,200 yuan now sells for 187 yuan. "Each year, the number of sellers grows by about 20%, but the number of buyers has stayed relatively stable," said the founder of another second-hand luxury business in China, who requested anonymity to speak candidly. "The middle class—its salary has really decreased. The economy is the number one reason we're seeing these trends." He noted that while large cities like Shanghai and Beijing still support new market entrants, smaller cities lack enough demand. "I would expect most of the recently opened stores will eventually close," he said. University professor Riley Chang browsed at Super Zhuanzhuan—not to buy anything, as she has avoided big brands since the pandemic—but to assess the market if she decides to sell her possessions. She left unimpressed. "I've been to several major second-hand luxury stores in Beijing and Shanghai, and they all try to push your price as low as possible," Chang said. ($1 = 7.1833 Chinese yuan renminbi)
Fashion Network
an hour ago
- Fashion Network
US-China trade talks on export controls to resume for a second day
Top U.S. and Chinese officials will resume trade talks for a second day in London on Tuesday, hoping to secure a breakthrough over export controls for rare earths and other goods that have threatened a fresh rupture between the two superpowers. Investors are hoping for an improvement in ties after the relief sparked by a preliminary deal agreed in Geneva last month gave way to fresh doubts after Washington accused Beijing of blocking exports that are critical to sectors including autos, aerospace, semiconductors and defence. White House economic adviser Kevin Hassett said on Monday that the U.S. was likely to agree to lift export controls on some semiconductors in return for China speeding up the delivery of rare earths. U.S. President Donald Trump said the talks were going well: "We're doing well with China. China's not easy." Trump's often erratic policymaking on tariffs has roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs. The second round of U.S.-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies. Customs data published on Monday showed that China's exports to the U.S. plunged 34.5% in May, the sharpest drop since the outbreak of the Covid-19 pandemic. While the impact on U.S. inflation and the jobs market has so far been muted, tariffs have hammered U.S. business and household confidence and the dollar remains under pressure. The two sides, led at the talks by U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, with the Chinese contingent helmed by Vice Premier He Lifeng, are meeting at the ornate Lancaster House in the British capital. The talks ran for almost seven hours on Monday and are set to resume after 0900 GMT on Tuesday, with both sides expected to issue updates later in the day. The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths have become. He did not attend the Geneva talks, when the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other. China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains and sparked alarm in boardrooms and factory floors around the world. Kelly Ann Shaw, a former White House trade adviser during Trump's first term and now a trade partner at the Akin Gump law firm in Washington, said she expected China to reaffirm its commitment to lift retaliatory measures, including export restrictions, "plus some concessions on the U.S. side, with respect to export controls measures over the past week or two". But Shaw said she expected the U.S. to only agree to lift some new export curbs, not longstanding ones such as for advanced artificial intelligence chips. In May, the U.S. ordered a halt to shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued.
Fashion Network
2 hours ago
- Fashion Network
French Senate to vote on regulating fast fashion
The French Senate is set to vote Tuesday on a bill regulating the fast fashion industry by sanctioning companies and banning advertisements. The bill targets Chinese-founded e-commerce giant Shein, which sells lower-quality clothes at very low prices. Fast fashion companies export large volumes of easily replaceable items to France, causing pollution and saturating markets. The lower house National Assembly adopted the bill in March 2024. The Senate will vote on it later Tuesday and is expected to pass it with government backing and widespread support in the chamber. The vote will not mark the final legislative step. A joint committee of senators and lower house deputies will meet in September to produce a joint text before the law's final adoption. "The text plans to reduce the environmental impact of the textile industry," said Anne-Cécile Violland, the center-right member of parliament who proposed the bill. Fast fashion continues to grow in France. Between 2010 and 2023, the value of advertised products rose from €2.3 billion to €3.2 billion. According to the state environmental agency Ademe, approximately 48 clothing items per person enter the French market each year, while 35 items are discarded every second. "Fast fashion poses a triple threat," said Minister for Ecological Transition Agnès Pannier-Runacher. "It promotes overconsumption, causes ecological disaster and threatens our businesses." The minister condemned an "invasion" of products that "do not last" and expressed hope that the bill would help drive change across Europe. Pannier-Runacher said that once France adopts the bill, the European Commission will review it to ensure compliance with European law. Targeting fast-fashion The Senate, where the right holds a majority, modified the bill to specifically target "ultra" fast fashion companies such as Asian websites Shein and Temu. The Senate's amendments aim to exclude French and European brands that could otherwise be affected, such as Zara, H&M and Kiabi. However, the bill will still require these fashion giants to inform their customers about the environmental impact of their products. "I have no intention of forcing French brands that contribute to our country's economic vitality to pay a single euro," said rapporteur Sylvie Valente Le Hir, a member of the right-wing The Republicans party. The bill will impose stricter sanctions on fast-fashion companies by scoring their "environmental communication," Pannier-Runacher said. This "eco-score" will apply to all fast-fashion companies. Companies that receive the lowest scores will face government-imposed taxes of up to €5 per product in 2025, rising to €10 per product by 2030. This tax cannot exceed 50% of the product's original price. Advertisement ban The bill will also impose sanctions on influencers promoting fast fashion products and ban fast fashion advertisements. "The regulation of the fast fashion industry will only succeed through a collective effort, not by targeting a single actor," Shein spokesperson Quentin Ruffat told RTL radio on Monday. Ruffat warned that the law would introduce "a tax of €10 per sold item of clothing by 2030" and would "impact the purchasing power" of French consumers. Environmental organizations also voiced concerns that lawmakers could misinterpret the bill. "Debates may amount to an interesting framework that still lacks substance," said Green Senator Jacques Fernique. On Monday, the Textiles Industry Union (UIT) recognized the bill as "a first step" and expressed hope for its "rapid adoption ... even if the text does not entirely fit our expectations."
