We’ve finally got an answer to what happens when the world’s largest car market, China, builds more EVs than it can sell at home: It exports them. Breaking news, I know, but that’s just the tip of the proverbial iceberg. The story isn’t just that Chinese automakers are exporting cars, but that they’re exporting controversial zero-mile “used” EVs.
The whole concept here is a bit bonkers. If you haven’t been keeping up, Chinese automakers were recently called out for registering brand-new EVs with zero miles on the odometer just to be able to count them as sales. Government incentives are then passed around and the ministries in Beijing are happy that automakers are “selling” tons of cars.
But, it turns out that despite these “used” EVs being a great value, automakers are having trouble offloading them to locals. According to Reuters, brands have figured out that they can quickly dispose of these cars simply by exporting them to other countries via a government-backed grey market.
Let’s dig into how it goes down.
Once an EV rolls off the assembly line, it gets registered with a Chinese license plate. This is something normally done once the vehicle changes hands from the dealer to the consumer, similar to the registration process in the U.S.
The car is then quickly de-registered, labeled as a used car, and then fast-tracked for export to places like Russia, Jordan, or a myriad of other countries in Central Asia and the Middle East.
Local governments tally up a sale, the brand logs revenue, and the exporter pockets a nice little profit for themselves. In fact, revenue was so good that exporters were able to earn around $1,400 (10,000 CNY) in profit per car in 2022 and 2023. A major markup, given the exporter purchased the car for around $5,400 (40,000 CNY) on average.
seems Canada may lift restrictions on Chinese cars some time soon
With Stellantis shifting some of its production from Canada to the US it’s time to remove, or at least severely lower, tariffs on Chinese EVs. The Big 3 ( General Motors, Chrysler (Stellantis), and Ford) needs o learn to compete on a level ground. I read a few months back that a few Chinese auto manufacturers are building production facilities in Mexico and South America – let’s get hem to do so here as well. My main concerns are in regard to safety – are they up to our road safety standards – and security, e.g. are hey sending client stats on each owner back to Beijing, and do they, like Tesla, have a built in kill switch that Tesla can brick your vehicle with. If the models from BYD are indicative or other Chinese cars then they are going to severely impact the NA auto manufacturing business as BYD undercuts Tesla’s price on equivalent specs by up to 50%