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Summary. Elon Musk's initial disdain for Chinese EV makers like BYD, a company backed by Warren Buffett, has taken a remarkable turn. Over the course of 13 years, BYD has surpassed Tesla as the world's best-selling EV manufacturer. Chinese automakers are expanding their market share with affordable electric vehicles, while American companies such as Tesla, GM and Ford are struggling to keep up.

The rise of Chinese EV makers marks a crucial shift in the global auto industry, similar to the disruption caused by Japanese automakers in the 1970s. This phenomenon is forcing U.S. automakers to push their technological boundaries and encouraging policymakers to rethink the fundamentals of trade strategies. China's dominance in the EV market threatens a U.S. industry worth $104 billion and 3 million jobs.

Chinese EVs are 20 percent to 25 percent cheaper

In the news. Chinese companies are offering an increasingly wide range of EVs at different price points, while U.S. manufacturers focus mainly on luxury EV models.

  • Chinese EV manufacturers are looking for opportunities to bypass trade barriers and sell their vehicles worldwide, including in Europe and the U.S.
    • Stellantis CEO Carlos Tavares estimates Chinese automakers' costs are 20 percent to 25 percent lower than European automakers.
  • The U.S. government and the auto industry recognize the need to become more competitive by offering cheaper electric cars and investing in the EV supply chain.
    • Tesla has been saying for years that a cheaper car is on the way, but (for now) without success.

From less than 1 in 6 to 1 in 3 in three years

Zoom in. BYD has overtaken Tesla as the world's largest EV seller by 2023, with one-third of all electric cars sold worldwide. In 2020, it was less than 1 in six.

  • Chinese companies have invested significantly in the EV supply chain, offering advanced technologies at lower costs.
  • Chinese automakers such as BYD, Chery and SAIC are exploring production opportunities in Mexico as a springboard to the North American market.

Zoom out. The rise of Chinese EV makers illustrates the shift to a more globalized and competitive auto industry, which is challenging traditional players and forcing them to innovate.

  • The battle for the EV market raises questions about globalization, trade policy and national security, especially with respect to EV data collection and management.
  • Competition between China and the U.S. in the EV market is likely to shape the development of the auto industry globally, with implications for technology, consumer choice and environmental policy.

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