During the Tang Dynasty (618-907), an overland trade route that began in modern-day Xi’an, Shaanxi province, carried silk and porcelain to West Asia and Europe more than a millennium ago. Even though the Silk Road is still in operation today, its cargo has changed to include new energy goods, with electric cars leading the way.
Chinese new energy vehicles have been delivering inexpensive solutions to green transition drives in more nations, especially developing economies, and have progressively earned a greater market share due to their cost-effectiveness, increased quality, and efficient after-sales service.
In light of deglobalization and geopolitical tensions, Chinese manufacturers of NEVs and auto parts have recently established more production facilities abroad in response to their foreign clients’ demands for prompt responses to their inquiries and on-time delivery amid increased supply chain security concerns. Mexico and Central Europe are becoming as popular investment destinations.
While some Western politicians and media outlets assert that China is producing excess capacity and exporting goods at low prices, experts and business executives refute the idea, arguing that the expanding international presence of Chinese manufacturers of auto parts and electric vehicles (EVs) not only benefits consumers by lowering costs but also presents significant opportunities for global manufacturers.
“Some foreign media have inaccurately linked China’s export growth in recent years to overcapacity, labeling it as ‘dumping’ without basis. The strong export performance of Chinese branded vehicles is due to improved product quality, technological upgrades and enhanced business services,” said Fu Bingfeng, deputy secretary-general of the China Association of Automobile Manufacturers.
According to the group, around 831,000 automobiles were exported in the first two months, which is a 21.9 percent rise over the previous year. Of these, 285,000 were NEVs, representing an increase of 11.1 percent over the previous year.
In response to claims of “overcapacity,” Fu stated that China’s NEV manufacturing capacity is now being used at a rate that exceeds 70% and falls within a reasonable range.
“China’s automotive industry is currently undergoing a transition period (from traditional fueled cars to NEVs). During this transition, investing ahead of market demand is a normal development strategy for the industry. As the market share of NEVs continues to rise, demand for traditional fuel vehicles will gradually be replaced. Consequently, companies will refurbish existing factories and transition to producing NEVs, which is a dynamic conversion process and needs time to adjust production capacity,” Fu said.