Reuters
While Western nations focus on the competitive threat of Chinese EVs, a different challenge is reshaping the auto industry. Beijing's legacy automakers are saturating emerging and second-tier markets with fossil-fuel vehicles — often undercutting their foreign partners China’s electric-vehicle industry captured half its domestic market in just a few years, crushing sales of gasoline-powered vehicles from once-dominant global automakers. But foreign players weren’t the only losers. Many Chinese legacy automakers also watched their sales collapse – and responded by flooding the world with fossil-fuel vehicles they couldn’t sell at home.
While Western policymakers have focused on the threat of China’s heavily subsidized EVs, protecting their markets with tariffs, U.S. and European automakers face greater competition from China’s gas-guzzlers in countries from Poland to South Africa to Uruguay. Fossil-fuel vehicles have accounted for 76% of Chinese auto exports since 2020, and total annual shipments jumped from 1 million to likely more than 6.5 million this year, according to data from China-based consultancy Automobility. The boom in gasoline-powered exports is driven by the same EV subsidies and policies that wrecked the China businesses of automakers including VW, GM and Nissan by underwriting scores of Chinese EV makers and igniting a devastating price war, a Reuters examination found. The phenomenon highlights the far-reaching impacts of Chinese industrial policy, as foreign competitors struggle to keep pace with government-backed firms chasing Beijing’s goals to dominate critical sectors nationally and globally. China’s gasoline-vehicle exports alone – not including EVs and plug-in hybrids – were enough last year to make it the world’s largest auto-exporting nation by volume, industry and government data show. This account of Chinese automakers’ global expansion is based on a Reuters review of auto-sales data in dozens of countries and interviews with more than 30 people, including executives from 11 Chinese and two Western automakers, distribution managers for Chinese brands and industry researchers. The influx of Chinese gasoline cars into emerging and second-tier markets reflects a collision between Beijing’s current EV push and older policies that built China’s domestic gasoline-vehicle industry by leveraging foreign automakers’ technology.
Among the biggest exporters are state-owned legacy giants, including SAIC, BAIC, Dongfeng and Changan, which historically relied on joint ventures with foreign automakers for profits and engineering know-how. These partnerships started in the 1980s as shotgun marriages forced by Beijing as the price of foreign players’ access to China. More recently, with the rise of innovative privately owned Chinese EV makers, led by BYD, these joint ventures’ sales have plunged. SAIC-GM’s annual China sales, for instance, fell from more than 1.4 million vehicles to 435,000 between 2020 and 2024, SAIC data show. Now these state-owned players are racking up sales in export markets that were once the domains of the same foreign automakers who are their partners in China. SAIC’s exports – mostly of its own brands, without GM – soared from nearly 400,000 annually in 2020 to more than a million last year. Dongfeng’s exports of nearly 250,000 vehicles last year, up almost four-fold in five years, proved critical as sales of its China partnerships with Honda and Nissan entered a “downward spiral,” said Jelte Vernooij, Dongfeng’s Central Europe manager. Dongfeng’s annual global sales have fallen by a million vehicles since 2020, to less than 2 million, company filings show. Yet Vernooij isn’t worried about Dongfeng’s future – because it has Beijing’s backing.
“The fact that we’re state-owned is key,” he said. “There’s no question that we will survive.” There’s also no question that, for now, gasoline cars are selling better in second-tier markets, such as Eastern Europe, Latin America and Africa, with scarce EV-charging infrastructure. Longer term, Beijing aims to dominate EVs and plug-in hybrids globally. But in the interim, many Chinese automakers are building overseas brands by giving customers whatever they want. China’s top auto exporter is Chery, whose global sales rocketed from 730,000 vehicles to 2.6 million between 2020 and 2024. Chery, which has both state and private owners, grew annual exports over the period by about a million units – relying mostly on the gasoline-powered vehicles that comprise four-fifths of its sales. China’s top 10 exporters include five other state-owned automakers and two private ones, Geely and Great Wall Motor, that also sell more gasoline vehicles than EVs. Only two of China’s top 10 auto exporters focus exclusively on battery-powered vehicles. One of them is U.S. electric-car pioneer Tesla. The other is BYD, which sells only EVs and plug-in hybrids. BYD’s push abroad this year has made it China’s second-biggest exporter and tilted the nation’s exports toward plug-in cars. Still, China’s gasoline-vehicle exports are on pace to exceed 4.3 million and account for nearly two-thirds of this year’s total. Overseas managers for Chery, Dongfeng and another state-owned automaker, FAW, told Reuters China’s cutthroat car market has made exports essential to Chinese automakers’ growth and profits. Giles Taylor, global vice president for design at FAW, believes some domestic rivals are one product failure away from going under.
“China’s so overpopulated with car companies,” he said. “It’s right on the edge of dog-eat-dog.” Most brands have focused on gasoline-car exports, the managers said, simply because they’re easiest to sell in most regions. “We can fine-tune our offering for every market,” said Nic Thomas, Changan’s European marketing director. Other top exporters SAIC, BAIC, Geely and Great Wall Motor and the government’s economic planner, the National Development and Reform Commission, did not comment for this report. Global automakers’ executives have widely acknowledged that rising Chinese rivals pose a serious competitive threat, but mostly in the context of their innovative and affordable EVs rather than gasoline models. Representatives of Toyota, GM, Ford, Honda, Nissan and Hyundai did not comment on China’s export surge. Some legacy players say they’re ready for the fight. Alexander Seitz, Volkswagen’s South America chief, said he had “no fear of the Chinese.”
“I respect them as a competitor,” he said. “They’re welcome to join the party.” In response to Chinese competition, Volkswagen is looking to export cars built in China to more overseas markets. A GM spokesperson pointed to CEO Mary Barra's October remarks that the company aims to compete with Chinese rivals “with the right technology, at the right cost.”