Chinese automakers may double their overseas full-process manufacturing capacity to skirt growing import tariffs in the US and the EU, according to a report by BloombergNEF.
“As the electric vehicle market in China saturates, increasing domestic competition and overcapacity are pushing Chinese EV brands abroad in search of new growth markets,” the report outlined.
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Usually, automakers exporting to foreign markets have opted for knockdown assembly, where auto parts are made in China and then assembled overseas. As import tariffs grow and operating costs in foreign markets become more restrictive, full-process manufacturing outside of China is on the rise. There are currently nine countries where Chinese-owned plants are going through the full four stages of production.
In 2023, these facilities abroad had an annual production capacity of 1.2m vehicles. This number could more than double to 2.7m by 2026 across twelve countries if investment announcements are completed on time. Automakers are looking to expand in Southeast and Central Asia, Latin America and the Middle East.
The EU recently voted in favour of new tariffs for Chinese EVs, a decision that received major pushback. It was also recently reported that a Chinese company was assembling cars in Russian plants that were vacated by Western rivals in 2022 at the start of Russia’s invasion of Ukraine.
