As Chinese automakers rapidly expand their global footprint, capturing a projected 33% global market share by 2030, legacy automakers face unprecedented challenges. With cost advantages, technological innovation, and aggressive international strategies, Chinese brands are reshaping the automotive landscape.

The global automotive industry is undergoing a seismic transformation, with Chinese carmakers emerging as dominant players. Once confined to their domestic market, brands like BYD, Geely, and Chery are now making significant inroads into international markets, challenging the supremacy of legacy automakers.

By 2030, Chinese automakers are expected to capture 33% of the global market share, up from 21% in 2024. In Singapore, their growth has been even more striking, with Chinese brands increasing their market share from 5.9% in 2023 to 18.2% in 2024, primarily driven by the rising demand for affordable electric vehicles. This rapid expansion has sparked concerns among traditional automakers, who must adapt quickly to remain competitive.

The driving forces behind China’s automotive ascent

• Cost advantages and localised production: Chinese automakers benefit from significant cost advantages, driven by economies of scale and vertically integrated supply chains.

For instance, BYD manufactures most of its components in-house, allowing it to offer vehicles like the Seagull EV at a starting price of under $10,000 in China. In comparison, the Tesla Model Y, produced locally in Shanghai, starts at RMB 263,500 ($36,000), while the European-made BYD Seal sedan costs around €45,000 ($49,000) when exported to Europe due to higher labour and production costs. Additionally, Chinese brands are adopting a ‘build-where-you-sell’ strategy, establishing production facilities in key markets such as Southeast Asia, Central Asia, and Europe.

• Technological innovation and EV leadership: Chinese automakers are at the forefront of electric vehicle (EV) innovation, aligning with global trends toward sustainability. Companies like BYD and Nio are producing technologically advanced EVs with features like smart cabins and autonomous driving systems, which appeal to modern consumers. This focus on innovation has enabled Chinese brands to outpace legacy automakers in the EV race, particularly in markets like Europe and Southeast Asia.

• Aggressive global expansion strategies: Chinese automakers are rapidly expanding their presence in international markets, leveraging competitive pricing and localised strategies. In Southeast Asia, for example, Chinese brands have surpassed Japanese automakers in market share, while in Central Asia, exports surged by over 25% during 2024, with shipments to Kazakhstan increasing by 25.2% and to Kyrgyzstan by 27.5% compared to the previous year. This aggressive expansion is not limited to developing markets; Chinese brands are also making significant strides in Europe, where their market share is expected to double by 2030. 

Impact on legacy automakers

• Declining market share in key regions: Legacy automakers are feeling the heat as Chinese brands encroach on their territories. In China, domestic automakers have increased their market share from 59% to 72%, squeezing out foreign competitors like General Motors and Volkswagen. Similarly, in Southeast Asia, Japanese automakers have seen their market share plummet from over 50% to around 35% as Chinese brands gain dominance.

• Challenges in the EV race: Traditional automakers are struggling to keep up with the rapid pace of Chinese EV innovation. While Chinese brands develop new models in half the time of their Western counterparts, legacy automakers face production delays and higher costs. This disparity has led to declining sales for companies like Volkswagen, which saw a 15% drop in China in 2024.

• Trade barriers and protectionist measures: To counter the rise of Chinese automakers, some countries have imposed trade barriers. The US has announced a 100% tariff on Chinese EV imports, while the EU is considering similar measures. However, these barriers may only slow, rather than halt, the global expansion of Chinese brands, as they continue to invest in localised production and partnerships.

The Road Ahead

As the automotive industry accelerates toward electrification, the future promises transformative changes driven by technological innovation, shifting consumer preferences, and evolving policies. Here’s what lies ahead for the global automotive landscape: 

• EVs dominating global sales: Electric vehicles (EVs) are set to dominate the automotive market by 2030, with battery electric vehicles (BEVs) projected to account for 81% of all new EV sales. Analysts predict a compound annual growth rate (CAGR) of 29% for EV sales, growing from 11.2 million units in 2025 to over 31 million by the end of the decade. This trend is bolstered by advancements in battery technology, which are reducing costs and improving vehicle performance.

• Regional shifts in market dynamics: China is already leading the global EV market and is expected to maintain its dominance as domestic brands like BYD continue to outsell internal combustion engine vehicles. Export restrictions on critical battery technologies may further strengthen its position.

 The EU’s mandate for charging points every 60 km along major transport routes by 2025 will alleviate range anxiety and boost EV adoption. Europe remains a hotspot for BEV growth, with countries like Norway and Denmark nearing full electrification.

Over in Southeast Asia, countries such as Indonesia and Vietnam are experiencing explosive EV growth, with sales surging over 200% year-on-year. Singapore is poised to become one of the first fully electrified automotive markets globally, surpassing even China in EV adoption rates.

• Policy-driven electrification: Governments worldwide are implementing stringent emission regulations and offering incentives to accelerate EV adoption. For example, the UK has introduced significant tax hikes on petrol and diesel vehicles starting in April 2025. The U.S. continues to support EV purchases through federal and state-level tax credits, while China’s export restrictions on battery materials may reshape global supply chains. These measures reflect a collective push toward sustainability, ensuring that EVs become a viable option for consumers across diverse markets.

• Technological breakthroughs in battery innovation: Battery advancements are revolutionising the EV industry, with technologies such as solid-state batteries enhancing energy density and reducing costs. By 2030, global battery demand is expected to grow tenfold, driving further innovation and making EVs more accessible to consumers.

• Expansion into commercial vehicles: Electrification is not limited to passenger cars; commercial vehicles like trucks and buses are also transitioning to electric power. Logistics companies are increasingly adopting electric fleets to reduce emissions and operational costs, with Amazon deploying heavy-duty electric trucks for freight operations in Southern California in 2024.
• Challenges on the horizon: Despite rapid growth, challenges remain. Expanding charging networks globally is critical to supporting widespread EV adoption, while export restrictions on key battery materials could disrupt production and increase costs. As EV penetration grows, some regions may struggle to sustain high adoption rates due to economic disparities.

The ripple effect of tariff changes on the automotive industry

The recent implementation of President Trump’s 25% tariffs on imported vehicles and auto parts has sent shockwaves through the automotive sector, reshaping market dynamics and consumer behaviour. These tariffs, aimed at bolstering domestic production, are expected to have far-reaching consequences for automakers, consumers, and the global economy.

• Rising vehicle prices and consumer impact: The new tariffs have already begun inflating vehicle prices across the United States. Industry analysts estimate that imported vehicles could see price hikes of up to $6,000 due to the 25% levy, with similar increases anticipated for cars assembled domestically using foreign components starting May 3. Vehicles priced under $30,000—such as popular models like the Honda Civic and Toyota Corolla—are expected to be heavily impacted, with analysts projecting that nearly 80% of these imports will fall under the new tariffs, according to industry estimates
• This price surge is expected to ripple through the used car market as well, with higher costs for new vehicles prompting increased demand for pre-owned cars. Cox Automotive, a leading automotive services provider facilitating over 40,000 dealer transactions annually, predicts a significant reduction in discounts as tariffs drive up costs across the industry. And a rapid escalation in prices across all categories of new vehicles, including compact cars, SUVs, and luxury models, are expected as supply constraints and tariff-induced costs ripple through the market.
• Shifting production strategies: Automakers are scrambling to adapt to the new tariff landscape. BMW has announced plans to absorb tariff costs temporarily for vehicles manufactured in Mexico, while Stellantis has suspended production at several facilities in Canada and Mexico, resulting in layoffs of 900 workers in Michigan and Indiana.
• For domestic manufacturers, these tariffs may incentivise greater reliance on U.S.-sourced components to mitigate costs. However, this shift could disrupt supply chains that have long depended on cross-border trade within North America under agreements like the USMCA.
• Declining sales and market contraction: The tariffs are projected to lead to a significant contraction in U.S. auto sales. Analysts forecast that approximately 2 million fewer vehicles will be sold in 2025 compared to previous estimates, driven by higher prices and reduced consumer purchasing power. This decline is expected to disproportionately affect lower-income buyers and those seeking entry-level vehicles.
• Opportunities for Chinese automakers: While U.S.-based automakers face challenges, Chinese carmakers could benefit from the tariff changes. Experts suggest that rising vehicle prices in the U.S. may make Chinese brands more competitive globally, especially in markets where affordability is a key factor. Additionally, Chinese manufacturers’ cost-efficient production methods and focus on electric vehicles position them well to capitalise on shifting consumer preferences worldwide.
• Long-term implications for global trade: The tariffs represent a significant escalation in trade tensions, with reciprocal measures likely from affected countries. This could lead to broader disruptions in global automotive supply chains and increased uncertainty for automakers operating internationally. At the same time, domestic manufacturers may struggle with higher production costs as they attempt to localise supply chains under pressure from regulatory changes.

Navigating uncharted territory

The introduction of Trump’s 25% auto tariffs marks a pivotal moment for the automotive industry, with profound implications for pricing, production strategies, and global trade dynamics. While some domestic manufacturers may benefit from reduced competition, rising costs and declining sales threaten profitability across the sector. As automakers grapple with these challenges, consumers are likely to bear the brunt of price increases, reshaping purchasing decisions and market trends for years to come.

The automotive revolution

The rise of Chinese carmakers marks a turning point in the global automotive industry. With cost advantages, technological innovation, and aggressive expansion strategies, Chinese brands are poised to dominate the market by 2030. While legacy automakers face significant challenges, they have the resources and expertise to adapt and thrive in this new era. The race is on, and the stakes are high.