Analysis Report on the Chinese Automobile Industry
Rapid Growth of the Chinese Electric Vehicle Market
"Need to Adjust Market Strategies Based on Demand"
As the Chinese automobile market continues to solidify its position as the world's largest automotive market, there have been recommendations to strengthen cooperation with China in high-performance and high-efficiency sectors such as automotive semiconductors, ultra-lightweight materials, and reduction and transmission technologies.
KOTRA (Korea Trade-Investment Promotion Agency) stated in its report, "Latest Trends and Implications of the Chinese Automobile Industry," published on August 5, that "electric vehicle production and sales now account for over 40% of the total market, establishing themselves as the driving force behind the growth of the Chinese automobile market." KOTRA explained that, as of last year, Chinese brands had surpassed an 80% market share in the local electric vehicle market, highlighting the remarkable rise of Chinese brands.
The report also noted the side effects brought about by China's rapid transition to the electric vehicle market. Since 2020, the Chinese electric vehicle market has experienced intensified low-price competition within the industry, leading to a widening performance gap among automakers. As of last year, only four companies?BYD, Tesla, Li Xiang, Haima (HIMA), and GAC Aion (AIAN)?surpassed the annual break-even point of 400,000 units sold out of approximately 130 electric vehicle companies. As a result, there are growing calls within the government and industry for restructuring to eliminate insolvent companies and to purify the market.
In addition, the automotive replacement subsidy introduced by the Chinese government in April last year has surpassed 10 million cumulative applications as of May 2025, raising expectations for boosting consumption. The Ministry of Commerce analyzed that in May alone, about 70% of individual passenger car buyers benefited from the trade-in program.
However, the rapid growth of Chinese electric vehicles and market encroachment due to low-price competition have raised concerns in the global automotive industry. The United States, the European Union, and Central and South America are responding with measures such as anti-dumping and countervailing duties, as well as restrictions on corporate investments.
The report also emphasized that Korean companies need to adjust their strategies in the Chinese market in line with the shift toward demand for electric vehicle technologies. In particular, it analyzed that there is demand for international cooperation in high-performance and high-efficiency sectors such as automotive semiconductors, ultra-lightweight materials, electric vehicle software and solutions, and reduction and transmission technologies.
Lee Jihyung, KOTRA Vice President and Head of Economic and Trade Cooperation Headquarters, stated, "We must secure competitiveness by developing technologies and components that reflect the characteristics and real demand of the Chinese automobile market and by strengthening partnerships with local companies." He added, "KOTRA will continue to support technology cooperation networking with relevant associations in China and strengthen demand connections with leading regional small and medium-sized enterprises."
The report will be available for download from KOTRA's Overseas Market News starting August 5.
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