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Wed, 27 May 2026

Wed, 27 May 2026 The world's carmakers are struggling to compete with China

The BBC visited China’s EV factories and found they are dominating the ecosystems shaping the global auto industry.
Chinese companies like BYD, XPeng, and Nio are making significant advancements in automation, with some factories producing cars at a rate of one every 76 seconds. These companies are also investing heavily in software development, with Xiaomi's EV factory featuring a car that can connect to phones and smart-home devices. The shift towards electric vehicles has given Chinese manufacturers an advantage due to lower battery costs and elaborate supply chains. State support has contributed to this advantage, with China channeling tens of billions of dollars into EV and battery manufacturing in recent years. Foreign carmakers are now changing their partnerships with Chinese companies, as they struggle to keep up with the rapid advancements made by their rivals. Companies such as Stellantis and Volkswagen are signing deals with state-backed Dongfeng to produce cars in China, while others like Toyota and Hyundai are expanding research operations in the country. Not all strategies are working though, with Audi struggling to sell its E5 model and GM writing down billions of dollars from its China operations. Japanese manufacturers have been slower to shift towards fully electric vehicles, leaving them vulnerable in China and South East Asia. Chinese carmakers are also pushing into emerging markets, despite facing tariffs of up to 45% in the EU. Brands such as Chery and SAIC are expanding abroad, with Chery's Jaecoo 7 becoming one of the UK's best-selling new models within 14 months of its launch. Experts warn that the shift towards China could affect manufacturing hubs in South East Asia and Europe, leading to job losses and economic instability. However, others argue that companies willing to collaborate with Chinese manufacturers have a chance to succeed, while those trying to stop their rise risk falling behind.