(NewsNation) — China is overtaking countries known for manufacturing, like Germany and the U.S., when it comes to making and selling cars.
The car industry is no longer centered in Detroit, also known as the Motor City. Now China is topping the list when it comes to car manufacturing, surpassing the U.S. and Japan.
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As recently as 2007, Chinese-made cars were failing European safety tests, limiting the country’s reach, but things have changed. It’s left some experts asking how other countries could allow China to overtake such a large industry.
“The reality is China’s had an industrial policy that’s planned out every 10 years, with a 40-year focus of dominating industries. Western companies and for-profit companies and companies that are listed on stock exchanges typically have a short-term mentality,” said Ray Wang, CEO of Constellation Research.
China’s achievement is getting respect from industry leaders, including Tesla’s Elon Musk.
“They are the most competitive in the world, that is our experience. And the Chinese market is the most competitive. They work the hardest and they work the smartest,” Musk said on an earnings call two weeks ago.
Musk already does business in China, operating a Tesla manufacturing plant outside Shanghai, but he also sees the country as a threat in the near future.
“If I were to guess, it would probably be some company out of China as to most likely to be second to Tesla,” Musk said.
For now, the future of automobiles appears to be electronic vehicles. That means anyone who can quickly pivot from a V6 engine to a lithium battery will thrive, and that’s right in China’s wheelhouse.
“They’ve got the supplies, and of course, they’ve got the labor and the ability to actually mass produce manufacture. That supply chain is hard to beat, and any country in any global area that’s trying to beat China is going to have to think through their supply chain,” Wang said.
While China has been building up its own car companies, it has also been buying others. Volvo and MG are now Chinese-owned and European brands such as Dacia, Spring and the BMW iX3 are all being produced in China.
The pandemic may have helped camouflage China’s gain on the market as it homed in on Europe, Asia and Latin America. But no country wants to lose the lucrative race to become No. 1.
Ultimately, China’s cheaper price point, which gives it an advantage with customers, could become more expensive if other countries decide to slap tariffs on Chinese cars to slow their increased speed as an industry leader.
China’s sales did slow at the end of 2022 and start of this year. Industry analysts say that it is thanks to oil prices dropping and the expiration of EV incentives for buyers.