The world's carmakers are struggling to compete with China

Chinese automakers are accelerating past Western and Japanese rivals across EVs, batteries, software and manufacturing, pressuring foreign brands’ sales and margins. Lower battery costs, deep supply chains and state support make China ~30% cheaper for producing a small electric SUV, boosting exports (about seven million cars/year, ~50% EVs). Foreign market share in China fell from 64% in 2020 to 32% this year, hurting GM (sales down >21% in Q1) and forcing strategic shifts: Volkswagen is paying $700m for XPeng software, Stellantis struck a €1bn deal with Dongfeng, and Western firms are expanding R&D in China. The shift favors Chinese OEMs (BYD, XPeng, Nio, Xiaomi) and risks jobs in Europe/SE Asia; tariffs are unlikely to fully block their global expansion. Tesla (TSLA.OQ) still exports Shanghai-built Model 3s but faces intensified competition as Chinese firms scale fast.