China is reportedly on track to overtake Japan as the world’s biggest auto exporter by the end of the year, according to Moody’s Analytics. CNBC reports that China is closing the gap with Japan, and the shortfall was only about 70,000 vehicles per month during the quarter that ended in June. That’s almost a 100,000-vehicle jump from the same period last year. Japan has held the title of the world’s biggest car exporter since 2019.
This newfound Chinese dominance stems from surging demand for electric vehicles. In the first half of 2023, China’s EV export receipts reportedly doubled from the same time last year. It’s beyond levels they were seeing before the pandemic. On the other hand, overall exports from Japan and Thailand – which include both ICE vehicles and EVs – haven’t gotten back to pre-pandemic levels.
Moody’s reportedly cited the fact that China has a bit of a competitive advantage when it comes to producing lithium-ion battery cells. This – as you may have imagined – gives the country an edge when it comes to the cost of producing EVs. CNBC says that China produces over half of the world’s lithium supply. A lot of that has to do with the fact China has relatively low labour costs compared to Japan and South Korea. China also reportedly has over half of the world’s refining capacity for the metal.
Some of the world’s largest automakers – like BMW and Tesla – have set up production facilities in the country. Still, foreign brands have not passed local ones like Chery and SAIC.
It’s a good time to be in the business of EVs. CNBC says that electric vehicles made up nearly 30 per cent of all passenger cars sold worldwide last year. That’s a huge jump when you consider they had less than 5 per cent of the market share pre-pandemic. EV sales reportedly jumped to more than 10 million vehicles in 2022, and China accounted for about 60 per cent of that market.