As China’s automotive industry experiences a significant shift, the global automotive sector faces a potential second China shock. This shock is driven by a combination of factors, including a surge in China’s automotive exports, a shift in internal demand, and the rapid growth of electric vehicles (EVs). These developments are reshaping the global automotive landscape and posing significant challenges to manufacturers and policymakers worldwide.
For conventional cars, internal demand in China has shrank dramatically —
Partially because total demand for cars has stalled (it is below its 2017 level) and partially because of pro-EV policies that led to a big rise in EV sales and production
— Brad Setser (@Brad_Setser) May 18, 2024
And now EV sales in China are slowing (even with the price war now underway … ) given China's weak economy — raising fears the same dynamics will replicate themselves in EVs.
BYD is increasing production from 3m to 6m cars a year over the next few years
— Brad Setser (@Brad_Setser) May 18, 2024
That's how China has gone from nothing to the single largest source of imports in Europe in 3 years …
(chart is in billions of euros not millions of cars)
— Brad Setser (@Brad_Setser) May 18, 2024
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