“If China wanted to come in and open a plant to build their cars here, I’d be okay with that,” Trump said in an interview on the Fox News program “The Ingraham Angle.”

However, he put one condition: Chinese automakers should not build cars in Mexico and ship them to the United States.

“I’m not knocking Chinese cars,” Trump said further.

The US President’s statement arrived immediately after American Senator Elissa Slotkin, a Michigan Democrat, said there were “rumors that Trump is planning to allow Chinese cars to be sold in the US as part of a larger deal ‌he’s ⁠putting together. ” That would be a strategic mistake.”

Trump, however, called Slotkin’s statement a “total phony rumor” and said he had kept Chinese vehicles out of the United States.

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The recall remedies will cover software updates, warning labels and improved markings around door handles.

The course correction comes amid Beijing’s rule change earlier in 2026, in which it has increased oversight of the EV industry through the introduction of tougher safety requirements, as automakers, locked in a fierce price war, roll out technologies at a quite fast pace in the world’s largest vehicle market.

Under the new rules, concealed door handles will be banned from 2027, making it the first country to phase out a design popularised by Tesla and widely adopted by domestic Chinese EV makers.

Most of the actions, classified as product recalls under Chinese regulations, got necessitated on the back of regulator inputs that stated that emergency mechanical door-release handles may be hard to locate or operate in a crash, a defect that has drawn state scrutiny after several cases of passengers trapped inside burning vehicles.

In one such incident during October 2025, a driver of a Xiaomi SU7 sedan died after a crash and fire because the passersby could not open the doors to pull him out.

The automakers, including Tesla and Xiaomi, will install warning labels free of charge to identify the handles, apart from deploying over-the-air, or remote, software updates.

Tesla’s recall is ‌the largest. Some 2.98 million imported and China-made Model 3, Model Y, Model S and Model X vehicles will be recalled from September 25, as per the information provided by the American EV giant to the State Administration for Market Regulation (SAMR).

The Elon Musk-led automobile giant has also said mechanical emergency door-release handles may be difficult to identify following a severe collision and electrical system failure, potentially hindering occupants’ escape or rescuers’ access.

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What began as a military operation against Iran’s nuclear and command infrastructure escalated within 48 hours into something the International Energy Agency (IEA) would later call the largest supply disruption in the history of the global oil market, eclipsing even the 1973 Arab oil embargo.

Iran’s closure of the Strait of Hormuz – the 33-kilometre chokepoint through which roughly a fifth of the world’s seaborne oil and LNG normally passes – did what geopolitics rarely manages: it forced nearly every government on earth to rethink, in the space of a few months, how it powers itself.

Six months on, with ceasefires struck, broken and re-struck, the headline numbers have become almost familiar. Brent crude, trading in the low seventies before the war, spiked past USD 120 a barrel within days.

Qatar’s Ras Laffan LNG complex took a direct hit that analysts estimated would need three to five years to repair, sending Asian spot LNG prices up by more than 140% overnight. Petrol pumps from Hanoi to Berlin saw queues not witnessed in a generation.

But the more consequential story is not the spike – spikes fade – it is what governments, companies and households did in response, and how much of that response looks permanent.

A crisis measured in decades, not weeks
Energy analysts have a habit of drawing three-scenario charts for crises like this: quick resolution, prolonged standoff, and full-blown regional war.

What has actually unfolded is messier – a stop-start conflict with ceasefires that hold for weeks before collapsing, as happened again in July when strikes resumed on tankers in the strait.

That unpredictability is itself the lasting economic signal. Markets can price in a war. What they cannot easily price in is a war that keeps almost-ending.

This is precisely why the IEA’s 2026 World Energy Investment report, released in May, reads less like a snapshot of a single bad year and more like a hinge point. Global energy investment is on course to hit USD 3.4 trillion in 2026, and the composition of that spending tells the real story.

Oil investment is set to fall for a third consecutive year, dropping below USD 500 billion, even as crude prices sit well above their pre-war range. That is a striking reversal of how energy shocks used to work. The 1970s oil crises triggered a drilling boom.

This one has done the opposite, because producers no longer believe elevated prices will last long enough to justify decade-long upstream commitments, and because the risk premium attached to Gulf infrastructure has made the region itself a harder place to invest in.

Where the money is going instead is instructive. Natural gas investment is climbing to USD 330 billion, its highest level in a decade, driven overwhelmingly by new liquefied natural gas export terminals in the United States and Qatar – a hedge against exactly the kind of chokepoint vulnerability Hormuz just exposed.

Renewables remain the largest single category of spending, at roughly USD 665 billion, more than half of it in solar. And in a twist that unsettles the clean-energy narrative, coal investment is heading for USD 180 billion, its highest since 2012, as Asian economies squeezed by the oil and gas disruption fall back on the one fuel many of them can produce at home. China alone accounts for close to 70% of that coal spending, even as it simultaneously leads the world in solar deployment.

The lesson governments appear to be drawing from this crisis is not “decarbonise faster” or “drill more,” it is “diversify everything,” reaching for whatever domestic resource is available, renewable or otherwise.

The geography of who pays
Energy shocks have never been distributed evenly, and this one is unusually blunt about who absorbs the pain.

The Gulf states that built their economic models on frictionless Hormuz transit – Saudi Arabia, the UAE, Iraq, Kuwait, Qatar – have seen exports collapse even with alternative pipelines like the East-West Petroline and the Abu Dhabi Crude Oil Pipeline running near capacity, together offering barely a tenth of what used to move through the strait.

Meanwhile, exporters outside the conflict zone have quietly profited. Analysis comparing shipping data before and after the war found the United States gained roughly USD 50 billion in additional export revenue and Russia more than USD 15 billion, simply by being able to ship oil that Gulf producers could not.

The knock-on effects reach further than fuel bills. Roughly ten million Indians work in the Gulf and send home upwards of USD 40 billion a year – around a third of India’s total remittance inflows – so any prolonged slowdown in Gulf economies lands directly on household incomes thousands of kilometres away.

Fertiliser markets, dependent on natural gas as a feedstock, tightened alongside LNG, prompting warnings from food-policy researchers about a slower-burning threat to crop yields in fertiliser-import-dependent regions well into 2027 and beyond.

And in a detail that says something about how thinly some economies are stretched, small trading states from Djibouti to Vietnam reported the kind of acute fuel shortages and panic buying that oil-rich nations barely noticed.

The unlikely beneficiaries
Every energy shock creates its opportunists, and this one has already reshaped investment maps well beyond the Middle East. Rystad Energy and other consultancies now point to Brazil, Guyana and Suriname as likely beneficiaries of a slower but broader fossil-fuel diversification through the 2030s, as buyers who once defaulted to Gulf crude look for suppliers with less geopolitical baggage.

Brazilian meat and poultry exporters, cut off from their usual direct routes to Gulf buyers, have rerouted through the Red Sea and Suez Canal at higher cost – a small but telling example of how conflict in one region reshapes trade logistics in entirely unrelated industries.

Electric vehicles have had an unexpectedly good war. April 2026 was the strongest month for EV sales in Europe on record, as fuel price volatility pushed consumers toward vehicles insulated from the pump. The United Kingdom saw its highest rate of solar panel installations since 2012 over the same period.

None of this is coincidence: crises that make fossil fuel prices unpredictable tend to make the fixed, known cost of a solar panel or a battery look considerably more attractive, regardless of what a country’s climate policy says on paper.

What actually sticks
The hardest question for anyone trying to write about this conflict’s “long-term effects” while it is still not entirely over is which changes are structural and which are simply crisis reflexes that will unwind the moment the strait reopens for good. Strategic petroleum releases, excise duty cuts, emergency tax credits for fuel-poor households – these belong to the second category. They will fade.

What looks more durable is the shift in how governments think about energy security itself. The IEA’s language is telling: officials now speak of “resilience rather than optimisation” as the organising principle of energy policy. That is a genuine change in worldview, not just a spending line.

Countries that spent the 2010s optimising for the cheapest barrel are now willing to pay a premium for supply they control, whether that means Chinese coal plants staying open longer than planned, new US and Qatari LNG terminals, or European grid investment running 20% higher than a year ago.

The IEA itself notes that nearly three-quarters of 2026’s investment decisions were locked in before the war began, meaning the fuller reckoning – in financing costs, in project pipelines, in where the next generation of energy infrastructure gets built – is still working its way through the system.

If the 1973 oil shock taught the world that energy security and foreign policy were inseparable, and the 2022 Ukraine invasion taught Europe that pipeline dependency was a strategic liability, the 2026 Iran war may end up teaching a subtler lesson: that in an interconnected energy system, the search for security itself becomes destabilising when every country chases it at once.

Six months in, the world is not so much replacing oil as hedging against needing quite so much of it from quite so few places – a shift that will likely outlast the war that triggered it by many year

The post How the Iran war rewired the world’s energy habits in just five months appeared first on International Finance.

The automaker, which possesses a legendary portfolio of brands like Fiat, Opel and Citroën, said production of the affordable, compact and fully electric “E-Car” will start in 2028 at its Pomigliano d’Arco plant in Italy, with potential for a “significant” volume increase later. The plant currently manufactures models including the Fiat Panda, which is set to remain in production at least until 2030.

The production blueprint of the new vehicle, which will reportedly have a price tag of around 15,000 euros (USD 17,500), comes at a time when automakers are trying to undo the neglect they had for low-cost, entry-level models, with rising electrification costs and safety regulations being cited as the primary factors, along with the pursuit of higher ⁠margins which drove the industry towards producing mid-sized and larger cars.

“Stellantis’ E-Car will draw on partnerships to keep costs down and speed up development and will help support local manufacturing jobs. Europe, where safety and emissions rules have significantly added to the cost of new cars, needed a new generation of stripped-down, cost-efficient small vehicles in the style of Japan’s kei cars,” the company said.

As per CEO Antonio Filosa, the automaker is looking to tap into demand for “small, stylish vehicles” made in Europe for the European market, adding the E-Car would come in “new models for multiple brands”.

“The European Commission has recognised the new E-Car segment for its potential to boost European design and manufacturing jobs and support a wider EV adoption, especially for everyday city mobility,” Stellantis added further.

However, it also warned that without more affordable EVs, the European Union’s push towards zero-emission mobility risks stalling, particularly among lower-income consumers.

“Safety features in the EU, such ⁠as sensors detecting whether a driver is falling asleep or an SOS button, are required on cars from the smallest ones up to larger SUVs, with a larger impact on the cost of cars used mainly for short city journeys,” the automaker noted.

As per the analysts, with expected high volumes, the E‑Car ⁠should help Stellantis improve its underused production capacity in Europe, a goal Filosa has been aggressively pursuing by expanding cooperation with Chinese partner Leapmotor. In earlier May, the two automakers announced the joint production of two models in Spain, while Stellantis suggested manufacturing cooperation with Dongfeng could ⁠expand beyond China.

The post Stellantis to focus on small, low-cost EVs to boost entry-level segment appeared first on International Finance.

AI took centerstage in the event, with Huawei introducing an in-car voice-activated agent dubbed Celia. CATL, on the other hand, grabbed headlines through its flying car concept, apart from displaying a lighter-weight product offering over 1000-km range, with the product reportedly possessing charging capability from 10% capacity to 98% in under seven minutes.

The Chinese electric vehicle giant BYD rewrote the innovation playbook, by making a giant freezer the main piece of attraction in its pavilion. Inside of the freezer, a car dripping with icicles showed the company’s new fast-charging system’s ability to power up a battery even in temperatures of -30° Celsius.

Western automakers up for collaboration

Despite the Chinese automobile industry being known for its brutal price wars and overcapacity, both Chinese companies and their foreign counterparts are gung ho about their prospects.

Germany’s Volkswagen, the largest overseas automaker by market share in the world’s second-largest economy, unveiled its new electric ID.UNYX 08. It has tied up with Xpeng to develop the vehicle’s electrical architecture, while Horizon Robotics took part in realising the in-car AI agent.

Huawei, in 2026 alone, will be investing 18 billion yuan ($2.6 billion) in smart driving research and development. Its software and components are currently used in some 50 models, with the company anticipating the number to double to 100 by the year-end. CATL, which increased its research budget by 19% to $3.2 billion in 2025, will be raising another $5 billion in the coming days.

Despite industry profit falling 18% in Q1 2026, along with dipping sales profit margin, revenues and outputs, the Chinese automotive sector is in no mood to back down on the R&D front, while foreign automakers are collaborating with local ecosystem players to ramp up their technology game in the biggest global car market.

Many of the vehicles, which made their debut in Beijing Auto Show, will likely end up being in European markets in the coming days.

“The stronger presence and engagement of global companies at the Beijing Auto Show highlights China’s rising importance as a centre for automotive innovation, and one of the world’s fastest-evolving car markets, especially as the industry speeds up its transition toward electric and smart mobility technologies,” Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), told the Global Times.

There was a change in tone among Western automakers during the auto show. Andreas Mindt, Volkswagen’s Head of Design, dubbed the event as ‘arguably the world’s largest’, while noting positive developments like more participants, global premieres, and new car launches, alongside rapid progress in EVs, battery technology, and self-driving systems.

“Volkswagen Group has been part of Auto China since 1990. No other international automotive player has such a great history like we have in China. China is like a fitness centre for the automotive industry. We saw it, we embraced it, and we changed ourselves,” said Oliver Blume, the German automaker’s CEO.

Volkswagen, with the goal of defending its position as China’s top-selling foreign automaker, will be launching over 20 new energy vehicle (NEV) models in the world’s largest vehicle market, a tally which will reach around 50 by 2030.

Volkswagen’s German peer, Mercedes-Benz, too is making electrification and intelligent technologies as pivots of their vehicle line-ups in China, while putting equal focus on luxury and high-end custom offerings.

As per Cui, the increasing engagement between global automakers and their Chinese counterparts only shows the evolution of the world’s largest vehicle market as a key hub for innovation, testing, and competition across new ideas, products, and business models.

“More and more domestic and overseas car brands are putting more investment into electrification, a move that clearly demonstrates there is no such thing as ‘overcapacity’ because the market demand is huge and expanding,” he noted.

US opting for tested protectionism

While the Beijing Auto Show gave a glimpse of the changing reality of the global automobile sector, with European automakers now seeing their Chinese counterparts as peers more than rivals, their American counterparts have taken a different direction.

Ford CEO Jim Farley doesn’t want Chinese companies on American shores, citing the move to be ‘devastating’ to domestic manufacturing. General Motors boss Mary Barra shares this view. In early 2026, she called the deal by Canada to allow Chinese EVs into the North American country a risk to the continent’s auto manufacturing sector, jobs and national security.

Both Farley and Barra found support within the Alliance for Automotive Innovation (AAI). AAI, that represents the US Big Three (General Motors, Ford Motor Company and Stellantis) and several other US manufacturers, has been stating that China poses a real threat to the American automotive sector.

In December 2025, AAI had urged Congress to maintain the Joe Bidenera ban on import of certain Chinese technologies and software, including vehicles produced in the world’s second-largest economy.

As per Rivian CEO RJ Scaringe, two factors: extremely low cost of capital due to heavy government subsidies and equally cheaper labour costs, compared to the figures in the United States, are giving Chinese EVs massive advantages over their Western counterparts. While current American tariffs do help balance prices and protect US manufacturing, Scaringe still wants a long-term protectionist solution.

Farley previously described Chinesemade cars as an ‘existential threat’ to the US auto market, citing technological advances, along with subsidies and labourinfrastructure support that reduce production costs. Despite Washington imposing tariffs of over 100% on Chinese vehicles, the Ford CEO strictly advised the Donald Trump administration against changing import rules, as China manufacturing EVs in the US will end up affecting American automakers on consumer price points.

As per Bloomberg data, in 2025, BYD surpassed Ford in total global vehicle sales, by dispatching approximately 4.6 million units, while Ford’s global wholesales declined nearly 2% to 4.4 million units.

However, there is an irony. Ford reportedly discussed the potential of joint ventures between the American auto company and Beijing-based Xiaomi with President Donald Trump, with the plan of allowing China to manufacture electric vehicles in the United States and sell them through a US-controlled joint venture. Ford denied the reports.

Ford also held talks with BYD to expand battery-supply partnerships, and explored manufacturing collaborations in Europe with Hong Kong-based Geely Automobile Holdings.

In January 2026, in the middle of the US-Canada trade war, Canada granted China an annual quota of 49,000 EVs, while stating that vehicles within this quota would enjoy the most-favoured-nation (MFN) tariff rate of 6.1% and be exempted from the 100% additional tariff.

The move from the Mark Carney government had one motive: catalysing considerable new Chinese joint-venture investment in Canada, with Ottawa itself taking the lead by working with Chinese auto manufacturers on timely vehicle certifications.

However, both Washington and Ottawa have an intertwined supply chain, with car parts and vehicles moving with ease under trade pacts first enacted three decades ago. China’s entrance in North America is bothering Uncle Sam given the fact that Canada is a major sales driver for Detroit’s carmakers. In 2025, Ford Motor, GM and Jeep maker Stellantis sold more than 700,000 vehicles combined in Canada.

Things have changed in Trump 2.0, with Canada’s auto industry taking a massive hit due the Trump administration levying tariffs on vehicles and parts made there. American automakers, to save themselves from the punitive measure, scaled down manufacturing in the neighbouring country.

Chinese players have jumped in to fill the void. As per reports, Chery, by end of April 2026, shipped the first vehicles to the North American country, including J5 from the sub-brand Omoda and Jaecoo. BYD, in March, registered its passenger vehicle manufacturing plants with Transport Canada’s Appendix G preclearance registry, the first Chinese automaker to do so in the Northern American country’s consumer vehicle segment. Expect others to follow suit.

There has been opposition against the Canada-China EV deal. CVMA (Canadian Vehicle Manufacturers’ Association) President Brian Kingston, apart from warning about Chinese automakers benefiting from ‘weak or non-existent labour rights’ that suppress wages and distort competition, informed the House of Commons that the 49,000-vehicle quota is “equivalent to 30% of the total number of EVs sold in Canada last year”. The lobby group has also backed the Conservative Party’s proposal to scrap the Chinese EV quota.

However, what is trumping these concerns is the vehicle buying preference of the Canadians. A poll by Nanos Research Group for Bloomberg News, conducted among 1,009 Canadians in early 2026, saw 53% of the participants stating the China factor would have no effect on their buying decision.

An intense battle ahead

A rare political consensus was witnessed on April 28, with more than 70 Democrat lawmakers urging Trump not to permit Chinese automakers to build or sell cars in the United States, with the urge of “not ceding the American auto industry to a strategic competitor ⁠intent on global dominance” emerging as the common theme.

The following day, Republican Bernie Moreno and his Democrat colleague Elissa Slotkin introduced bipartisan legislation to harden the American ban further. These political actions might have been triggered by Trump’s January statement, in which he expressed his openness to Chinese automakers building vehicles in the United States.

However, warning signs have already started showing up. Despite Pete Hoekstra, US Ambassador to Canada, announcing that Chinese-made EVs entering Canada will be barred from crossing into the United States, a Daily Mail report claims that ‘cheap Chinese Cars’ have been spotted in Texas towns bordering Mexico, despite a January 2025 executive order (that banned building or selling of Chinese vehicles in the US).

“Chinese-manufactured vehicles are legal in Mexico. El Paso residents are just miles from the southern border and have seen Chinese vehicles, such as Geely Auto and BYD, slip into the city,” according to the report. The information, if authenticated, could unsettle policymakers and industry players.

The post Beijing Auto Show: Europe collaborates, US frets appeared first on International Finance.

However, the Society of Motor Manufacturers and Traders suggests the overall industry outlook is cloudy because most sales reflected orders placed before the Iran war began. The industry body also expressed concerns over consumer confidence and vehicle affordability.

“The headlines belie the costs incurred and the challenges involved,” said SMMT Chief Mike Hawes, noting that March is typically the busiest month in a financial year and that strong demand from private buyers boosted new car registrations.

However, the latest data shows the new vehicle market maintaining its sales uptick, which started in December 2025. Still, the Middle East conflict, now in a two-week ceasefire phase, pushed oil prices beyond the USD 100-barrel mark, creating clouds of uncertainty for economies worldwide.

“We expect the good run of form in the car registrations data will grind to a halt ‌in the ⁠coming months, as the weight of surging energy costs and the prospect of (rate) hikes from the (BoE) MPC curbs affordability,” said Elliott Jordan-Doak, a senior economist at Pantheon Macroeconomics, while interacting with Reuters.

According to the United Kingdom’s SMMT, volatile geopolitics and the surge in fuel costs may increase demand for electric vehicles while risking higher energy and supply chain costs.

“Battery electric vehicles recorded their best month in terms of volumes in March, though their overall market share remained at 22.6%, well below the government‑mandated target, opens new tab of 33% for 2026,” the industry body remarked, while stating that Tesla’s new registrations in the European country rose 20% from a year earlier to 8,599 units, trailing Chinese peer BYD’s nearly 134% jump to 15,162 units.

“With uncertainty around the cost of fuel, electric vehicle enquiries are on the up, as consumers look to electric as an attractive alternative to petrol and diesel vehicles,” said Jamie Hamilton, automotive partner and head of electric vehicles at ⁠Deloitte.

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Antony Froggatt, Senior Director for Aviation, Climate, Energy, and Shipping at T&E, a Brussels-based NGO advocating clean transport and energy, told International Finance, “Many forecasters, such as the IMF (If energy prices sustain just a 10% increase over one year, this would add 0.4 percentage point to inflation and slow economic growth by 0.1%-0.2%,) and Fitch, suggest that higher energy prices will negatively affect global inflation and reduce global growth. The extent of these will depend on how high prices get, and how long they remain high.”

Jan Rosenow, Professor of Energy and Climate Policy at Oxford University and Senior Associate at Cambridge University, said, “The short-term pain is real. Higher inflation, squeezed household budgets, and recession risk in energy-intensive economies. But the adjustment mechanisms are also kicking in: strategic reserve releases, demand destruction, and accelerated supply from non-Gulf producers. The deeper concern is duration. A shock that lasts months reshapes investment decisions in ways that a spike lasting weeks does not.”

Clean energy pivot: A Must For Asia Now

In 2026, Asia has become the Europe of 2022. Back then, Russia, in response to the Western sanctions for the Ukraine war, significantly cut natural gas supplies to the continent, resulting in high energy prices and a cost-of-living crisis. Asia, which buys more than 80% of the crude that transits the Strait of Hormuz, is now facing an “energy emergency.”

This could prompt Asia to have a re-look at renewables and initiatives to future- proof both its energy security and economic outlook.

Froggatt commented, “I would argue that renewables have been a necessity for some time, and the economic case for them is even stronger now. As far back as 2020, the International Energy Agency called solar PV the ‘cheapest source of electricity in history’. Since then, the costs of not only renewables (solar and wind), but also storage options, particularly batteries, have continued to fall.”

Rosenow remarked, “Each successive shock – 2022, and now this – makes the economic and security case for domestic clean energy harder to ignore. Renewables are not just cheaper in many markets; they are now the geopolitically safer choice. The question is no longer whether to accelerate the transition but how fast institutions can move.”

EV: The Best Starting Point

Stating that higher fossil fuel prices affect consumers’ cost of living and the balance of payments of importing countries, Froggatt believes episodes like the 1970s global oil price spikes, and the European energy crisis in 2022 will only motivate policymakers to accelerate their efforts to limit their dependence on fossil fuels for economic and supply security reasons.

“We saw this in the EU with the introduction of the ‘Fit for 55’ package in 2022 to accelerate the transition away from imported fossil fuels. However, the majority of these measures will take time to have an effect. If we want to really reduce dependency on fossil fuel, structural changes with new investment are needed, particularly in infrastructure, such as the grids and buildings,” he stated.

Rosenow, on the other hand, remarked, “The pressure is certainly there. Asia bears the heaviest volumetric burden from Hormuz disruptions, and governments that were already energy-insecure are now facing acute supply anxiety. I’d expect faster permitting of renewables, more serious electrification policy, and renewed interest in long-term LNG alternatives – though the pace will vary significantly by country.”

To deal with the “energy emergency,” Asian countries are advocating solutions like a four-day workweek and preventing unnecessary travel to save fuel. This might make electric vehicles more attractive.

Froggatt says, “I would assume that sales will continue to increase. Globally, only around 10% of car sales are electric, but in leading countries, such as China and Vietnam, we are already seeing over 40% of car sales being electric. Consequently, as the cost of electric vehicles continues to fall and charging infrastructure becomes more available and robust, the pace of sales growth will accelerate, especially in an era of high fossil fuel prices.”

Froggatt also pointed out that in Europe, car manufacturers have failed to develop smaller, low-cost EVs fast enough. This is part of the reason why Chinese vehicles are entering the EU market so quickly.

“I think it is incumbent on all car manufacturers to make EVs to meet a variety of consumer requirements, which include those that are most affordable,” he said.

So, Asia should focus on the affordability factor, introducing tax credits for consumers, apart from setting up intensive charging networks.

“There have been significant cost reductions already. And in many markets, EVs are close to or at cost-parity over their lifetime. Further cost reductions are needed to shift the market faster to EVs,” Rosenow noted, while adding, “The underlying drivers – policy support, falling battery costs, expanding model ranges – remain intact. Short-term, high fuel prices actually reinforce the EV value proposition. The risk to growth is on the supply side: critical mineral availability and manufacturing capacity. I don’t see a near-term peak, but the rate of growth will inevitably moderate as markets mature.”

The Continent Holds Promise

As per the International Energy Agency’s (IEA) Renewables 2025 report, two of Asia’s growth engines, China and India, along with the United States and Europe, were responsible for clean energy’s global expansion. Southeast Asia holds promises too. With an estimated 20 terawatts of untapped solar and wind potential (equivalent to around 55 times the region’s current total power capacity), the IEA sees the region as being more than capable of securing its energy security through the renewable route.

“The case for doing so has never been stronger. Energy import dependence is now visibly a security and economic liability, not just an environmental one. Southeast Asian economies, in particular, have strong renewable resource endowments – solar, geothermal, offshore wind – that remain underexploited. The Gulf crisis should be the catalyst for a serious regional rethink,” Rosenow said.

Froggatt too observed, “It is not just countries in Asia that can and should accelerate their use of renewable energy. Without accelerating deployment in the EU, the 2030 renewable energy target of at least 42.5% of energy from renewables will not be met. In developing countries, renewable energy is a way to meet rapidly increasing demand. Governments can take several steps to support the renewable energy sector. They can reduce construction risks and costs through accelerated planning, grants, soft loans, and other measures. Furthermore, they can implement support schemes, such as contracts for difference or feed-in tariffs, that create stable revenues. Governments can also help develop local supply chains, which provide additional price security and create local jobs. Finally, governments can set targets for renewable energy use, which gives confidence to investors.”

While noting that higher rates will raise the cost of capital precisely when deployment needs to accelerate, Rosenow advised, “The policy response matters enormously here: blended finance, public guarantees, and development bank support can reduce the risk premium that makes projects unfinanceable in the private market alone. Countries that get this right will attract investment; those that don’t will fall behind.”

Despite investing heavily in offshore wind, solar, and hydrogen strategies, Japan and South Korea still fulfil a massive chunk of their energy requirements through imported fossil fuels. Both of them are feeling the Hormuz pinch right now.

Rosenow said, “This crisis is a stress test they (Japan and South Korea) were always likely to fail. Both countries have made genuine progress in renewables but remain structurally dependent on imported fossil fuels in ways that leave them exposed to exactly this kind of shock. A serious reassessment of domestic generation capacity is overdue.”

Maybe, it’s time for Japan to shed the ghost of Fukushima.

Froggatt said, “Electricity generated from renewable energy is, under most conditions, far cheaper than that generated by nuclear power. In addition, renewable energy generation is much quicker to build. Therefore, although some countries may look again at nuclear power, I think that the higher costs and slowness to build – especially in countries that don’t already have a nuclear sector – will reduce the number of countries that actually start building nuclear power plants.”

Rosenow concluded, “The political and public calculus on nuclear in Japan was already shifting before this crisis, with several reactors being restarted. A prolonged Gulf disruption accelerates that conversation considerably. Energy security concerns now outweigh, for many policymakers, the post-Fukushima caution. I would expect Japan to move more decisively on restarts over the next few years.”

The post IF Insights: War in Middle East likely to accelerate Asia’s renewable energy revolution appeared first on International Finance.

The cumulative value of used vehicles sold reached R14.32 billion in January, up from R12.89 billion in December, and R12.59 billion a year earlier. The average transaction price moderated slightly to R416,082 from R419,537 in December 2025, while average mileage declined to 70,938 km, continuing a gradual downward trend.

Toyota continued to capture the majority share in the used vehicle market, with 5,876 units sold in January, ahead of Volkswagen (4,733) and Ford (3,577).

Decoding Ford’s figures, more than half of the total came from Ranger sales, underscoring the continued strength in the bakkie segment. This highly competitive, core automotive market focuses on utility, durability, and lifestyle.

The best-selling used vehicles

According to AutoTrader data, at the model level, the Ford Ranger retained its position as South Africa’s best-selling used vehicle, with 2,069 units sold, up 6.3% year-on-year, followed by the Toyota Hilux (1,604 units), and Volkswagen’s Polo Vivo and Polo. Together, these four maintained their positions among the top four best-selling models.

Compact and value-driven models showed some of the strongest gains. The Suzuki Swift moved ahead of the Toyota Fortuner in overall rankings, with 794 units sold and year-on-year growth of nearly 25%. The Toyota Corolla Cross and Hyundai Grand i10 also recorded notable annual increases, reflecting a continued shift towards smaller, more affordable vehicles.

None of the top 10 models posted a year-on-year decline, although performance varied across brands. Suzuki recorded the greatest month-on-month improvement, while Hyundai achieved the highest annual growth rate. BMW was the only major brand to register a monthly decline, although it remained up year-on-year.

AutoTrader’s “2025 Annual Car Industry Report” reveals the emergence of quite a few trends. One among them is established industry players maintaining strong sales figures. Among the vehicle categories, while compact hatchbacks gained a significant market space, SUVs further consolidated their dominance. If Chinese brands gaining measurable ground was the surprise factor, new energy vehicles (especially hybrid ones) gaining prominence gave a sneak peek at the African country’s direction towards a clean transport sector.

AutoTrader CEO George Mienie stated, “The used car market delivered solid growth. A total of 383,410 used vehicles were sold in 2025, generating R160.1 billion in sales value, representing a 7% increase over 2024. Four interest rate cuts in January, May, July, and November 2025, reduced borrowing costs and provided meaningful relief to consumers. However, while economic conditions improved, buyer behaviour remained disciplined. If anything, 2025 reinforced how firmly affordability and practicality now anchor local purchasing decisions.”

Which models were in demand

Among second-hand cars, search behaviour shifted at the brand and model level. BMW was the most-searched brand on AutoTrader, with 76 million searches. On a model level, the Volkswagen Polo was the most-searched, displacing the Toyota Hilux from its long-standing leadership position. On the search interest front, Ford Ranger, Volkswagen Polo Vivo, and Toyota Hilux continue to dominate overall sales volumes, indicating the strength of established names in the used market.

While the Ford Ranger maintained its position as the most-enquired bakkie vehicle, its demand remained in the higher territory, despite growing cost pressures. Compact hatchbacks have earned significant momentum in the used car market, with models such as the Suzuki Swift and Toyota Starlet capturing a larger share of the market.

“The Swift stood out as the fastest-selling used vehicle in South Africa, averaging just 26 days before sale. That turnaround time reflects strong underlying demand for vehicles that are affordable to finance, efficient to run, and practical for everyday use,” Mienie stated.

While the average used car price grew 3% year-on-year to R417,584 in 2025, the average vehicle age remains five years. The average mileage was 73,646 km.

Pragmatic approach to electric vehicles

The new energy segment (electric vehicles) grew by a strong 73% in 2025, powered by hybrid cars. Hybrids ended up accounting for nearly 85% of all new-energy vehicles sold. This growth also gave an insight into South Africans’ EV adoption strategy: choosing practical, money-saving options instead of waiting for full electric cars that need better charging networks and lower prices.

Hybrids (known for combining a petrol engine with an electric motor) saw sales jumping 76% compared with 2024, with 4,888 units changing hands. In total, 5,727 used hybrids and battery electric vehicles were sold by the end of December 2025, showing steady interest in greener driving options. This segment was dominated by locally built Toyota Corolla Cross Hybrid, with many buyers opting for the model’s reliability, affordability in the used market, and, most importantly, the absence of range anxiety of pure electric cars.

Other popular models included the Volvo EX30, and various Toyota and Lexus hybrids, vehicles that offer good fuel savings.

Battery electric vehicles, despite showing a 55% year-on-year increase, remained a distant second in the new-energy car market.

Used hybrids have proven to be game-changers for South African families and first-time car buyers, as these vehicles use less fuel than ordinary petrol cars, produce fewer emissions, and often come with lower running costs, during an age of high petrol prices, and living expenses. Because hybrids do not rely completely on charging infrastructure, they suit South African roads and lifestyles better than full electric cars for now.

China: New player in the sector

While European, American, Japanese, and Korean vehicle brands have been dominating both the new and used vehicle markets, 2025 witnessed the emergence of Chinese brands in the sector.

Chery Tiggo 4 Pro was the best-selling used Chinese car. The crossover, since 2025, has remained one of South Africa’s best-selling new passenger cars, with more than 1,000 units sold each month. Last year, 3,144 units were sold, underscoring the popularity of Chery’s smallest offering. With an average price of R284,779, it is one of the cheapest cars on the list, both on the new and used-car segments, despite its low average mileage of 21,970 km, and a registration age of just two years.

Next is the Haval Jolion, which competes in the same crossover class. However, with fewer models, particularly more budget-focused derivatives (the cheapest new version is R348,950), sales are slightly lower at 2,736 units.

The oldest entry on the list was the Great Wall Motor’s discontinued six-year-old Haval H2, which landed at the sixth spot with 1,063 units, while the much newer Omoda C5 came seventh with 806 purchases.

While vehicles like Chery Tiggo 4 Pro and Haval Jolion are mostly ICE (Internal Combustion Engine) vehicles with some plugless hybrid variants, Chinese automobile players have reportedly started offering more plugin options. These players, already known for their rapid global expansion (using affordability as a weapon), are now sweetening things further for their South African customers by adding more PHEVs (Plug-In Hybrid Electric Vehicles) and BEVs (Battery Electric Vehicles) to both the new and second-hand segments.

Sales of plugin hybrids (PHEVs) were up 280% in 2025 compared with 2024, with brands like Haval, Chery, Omoda, Geely and BYD leading the charge.

“Chinese vehicle manufacturers have learnt how to narrow the gap between cost and perceived value, delivering around 80% of the consumer experience at roughly 60% of the price of traditional players. By focusing on tangible performance and visible benefits rather than legacy branding, they have capitalised on a shift in consumer behaviour. As buyers become more informed and discerning, brand loyalty is weakening, replaced by an expectation for high-quality products that justify every rand spent,” Mienie told Creamer Media’s Engineering News.

Bakkies rule the roost

Bakkies, the Ford Ranger in particular, had a massive share in the used car segment. These are basically pickup trucks with open cargo beds. Renowned as ‘workhorses’ for cargo, bakkies have evolved into popular lifestyle vehicles in the African nation.

According to the AutoTrader data, the used car market shipped 30,742 vehicles in December 2025, with 1,744 being Ford Rangers. Buyers reportedly opted for four-year-old Rangers with an average mileage of 83,958km.

The average used Ranger sold last year fetched a price of R497,960, which represents a saving of nearly R80,000 compared to buying the cheapest variant of the popular bakkie brand new.

In contrast, the most expensive version of the Ranger is the 3.0T V6 Raptor double-cab, which fetches a handsome price of R1,271,000.

A used Ranger comes in many forms: single-cab workhorses, which are found on construction sites and farms, while double-cab variants are often used by families to haul children to and from school. Add the affordable price factor, and buying the vehicle becomes a win-win deal for average South Africans.

For businesses, Ranger, in its current-generation form, offers a reliable fleet option. Be it the powerful Raptor, or versions like XL single-cab and XLT double-cab, they offer varieties like the cheapest, mid-range, and most expensive models, both on the new and used markets.

With regard to Bakkie’s popularity in South Africa, Nissan sold a grand total of 434 units of NP200 in March 2025, despite the fact that the vehicle is no longer officially on sale. It was supposed to be the Japanese company’s last compact bakkie in the South African market, before its discontinuation in April 2024.

Despite Nissan pulling the plug on its NP200, citing ageing design as the primary factor, the model continues to be the workhorse for small businesses and will remain one of the dominating names in the second-hand car market.

Decoding the customer mindset

The year 2025 was the one when South Africa faced an acute cost-of-living crisis. The nation’s Competition Commission’s inaugural ’Cost of Living Report’, which came out in September, presented the harsh reality: prices for electricity, water, education, and food outpacing overall inflation.

Electricity prices saw a 68% increase, followed by water with 50%, exceeding the general inflation rate, which itself stood at 28%. Food staples, such as brown bread, maize meal, and eggs, were witnessing widening margins, or sticky prices in some cases, despite falling producer costs.

With this background, four interest rate cuts were implemented in the year, totalling 100 basis points. Customers bought cars, but with a lot of financial discipline and self-restraint, and that’s what ended up helping the second-hand car industry.

During an interaction with Dealerfloor, Mienie stated, “Buyers are still active, but they are more deliberate and value-driven than ever before. The brands gaining traction are those aligning product offering, pricing and perceived quality with real-world affordability constraints.”

While Ford Ranger, Volkswagen Polo Vivo and Toyota Hilux dominated overall transactions and bakkies topped the chart, reduced financing costs led to accelerated demand for smaller, more economical vehicles. What the recent cost-of-living crisis has told the South Africans is that financing costs for new vehicles go up with every cycle of interest rate climb. Add monthly repayments and insurance premiums, and the situation leads to cash bleeding. A second-hand car, by contrast, often delivers the same utility at a far gentler price point.

According to reports, buyers are also reducing long-term financing exposure by taking smaller loans while also lowering costs on insurance, licence and registration fronts.

The availability of vehicle history reports and online valuation tools allows consumers to assess pricing, mileage and ownership records with ease. If you factor in the dealers’ game of elevating their used-car offerings, providing certified pre-owned vehicles, service plans and warranties, customers are getting an experience similar to buying a new car.

Car ownership is increasingly becoming a practical tool rather than a status symbol. In a climate where every rand counts, buyers are bound to think whether they should complicate their financial health further by buying a brand-new car, with higher financing costs. Thus, the so-called second-hand, but tried-and-tested models, with widespread service support, are capturing the buyers’ minds.

More than swanky features, brands and models known for longevity are in high demand, particularly those with solid fuel economy and manageable maintenance costs. Priority is to choose cars that fit South Africans’ lifestyles, not just their aspirations.

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The metal gets used in activities like electrification, construction of solar power panels, electric vehicles and data centres, all areas in which demand has been rising, eating into inventories. Tony Sycamore, a market analyst at IG, said a “generational bubble” was playing out in silver, as more capital was drawn into the precious metals market.

“The rally in precious metals has been supported by expectations of multiple Fed rate cuts in 2026, alongside robust central bank and private investor buying. However, the dominant driver of late has been a severe structural supply-demand imbalance in silver, sparking a scramble for physical metal,” Sycamore said.

Commenting on the silver price rise, media outlet Bloomberg stated, “Much of the world’s readily available silver is sitting in New York awaiting the outcome of a US Commerce Department investigation into whether imports of critical minerals pose a national security risk. The review could pave the way for tariffs or other trade curbs on the metal.”

On December 29, it seemed like gold and silver were on track for their best years since 1979. Gold rose by more than 70% in 2025 to more than USD 4,500 an ounce, up from USD 2,623 at the start of the year. Spot platinum rose 5.3% on December 26 to USD 2,338.20 an ounce, in its strongest weekly rise on record. Both platinum and palladium, which are key components in automotive catalytic converters, have surged due to tight supply, tariff uncertainty, and rotation from gold investment demand, with platinum up roughly 170% in 2025.

Silver also has a role as a monetary metal – a store of value. However, Elon Musk’s warning looks more on the manufacturing side, as a price surge may end up with manufacturers suffering the consequences.

As per the industry estimates, battery electric vehicles (BEVs), like Teslas, typically use about 25–50 grams of silver per car. This is roughly 0.8–1.6 troy ounces per vehicle in electrical contacts, power electronics, and control systems.

The metal has risen sharply during December, part of a rally that also pushed gold and platinum to record levels on Boxing Day. Analysts have attributed the price jump to expectations of interest rate cuts by the Federal Reserve in 2026, leading to increased demand for hard assets that protect against inflation and currency debasement.

Also, China has imposed new restrictions on silver exports, which will begin on 1st January. The move has further created supply-related fears, while geopolitical worries have lifted demand for safe-haven assets. Under the new rules, companies must secure licenses from the Xi Jinping government to export the metal, with eligibility limited to state-approved firms producing at least 80 tonnes annually, apart from holding USD 30 million in credit lines.

This move, as per the analysts, effectively blocks small and mid-sized exporters, reducing international supply almost overnight. According to Statista, global silver supply stands at around 1 billion ounces. Analysts estimate that supply deficits of 115 million to 120 million ounces in 2025 are straining global inventories, as mine production fails to meet consumption for a fifth consecutive year. Silver’s total market capitalisation has now crossed USD 4 trillion, fuelled by a short squeeze in October and renewed safe-haven demand amid global rate cuts and geopolitical tensions.

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Government policies and subsidies have effectively made China a leader in the global automotive industry and electric vehicles. Domestic automakers have met the production targets that the Communist government’s policy wanted to achieve, but a new headache has emerged.

The world’s second-largest economy’s auto industry is making more cars than the global market can absorb. The industry players are finding it increasingly difficult to make a profit.

China’s EV glut problem

Compared to the United States, Chinese electric vehicles start at less than $10,000, whereas the average price of an EV remains at $35,000.

Liuzhou, a Chinese city with a population of 21 million, has a showroom in a shopping mall offering special deals on new cars, including 50% off on locally made Audis and a seven-seater SUV for about $22,300, more than 60% below its sticker price. These cars are made by China’s FAW (First Automobile Works).

With so many cars in one place, these deals are possible. A company called Zcar, which informed Reuters about its business practice of buying in bulk from automakers and dealerships, is now offering customers the option of choosing from among 5,000 vehicles.

An industry survey released in August 2025 revealed that many manufacturers were struggling with excess inventory. As a result, they have been unable to generate additional revenue, leading dealers to lower prices. Some retailers have registered and insured unsold cars in bulk, a strategy that enables automakers to count these vehicles as sold and allows dealers to qualify for factory rebates and bonuses from manufacturers.

“Unwanted vehicles end up in the hands of grey-market traders like Zcar, which pop up in fire sales on TikTok-style social media sites. These cars are rebranded as used (even though the odometer says otherwise) and exported overseas, or some wind up in weedy car graveyards. According to many industry figures and analysts, these practices are signs of a market that is vastly oversupplied and at risk of a shakeout, as is seen in the Chinese property market and the solar industry,” Reuters reported.

China’s emphasis on boosting sales for job creation and growth comes at the cost of profitability and healthy competition. It makes local governments compete with each other for cheap land and subsidies for automakers. They make production and tax-revenue commitments, which fuel overcapacity across the country.

During an interaction with Reuters, Rupert Mitchell, an Australia-based macroeconomics commentator who previously worked at a Chinese EV startup, said, “When there is a directive from Beijing that this is a strategic industry, every provincial governor wants the car factory. They want to be in good shape with the party. Ultimately, what happens is that it makes the existing auto sector double down on investment.”

A review by Reuters of thousands of car-sales listings, hundreds of government documents, state-media reports, court filings, and consumer-complaint records, as well as interviews with over 20 industry players, including dealers, buyers, analysts and manufacturing executives, shows how oversupply is enfeebling China’s auto market even as the industry emerges as a world power.

Foreign rivals are lagging Chinese brands in delivering new models, but the same government policies that spurred explosive growth and innovation in automaking are causing lose-lose transactions throughout the domestic sales chain.

The industry and commerce ministries did not address these issues publicly, issues like pressures facing the sector, the potential for consolidation or the extent to which government policies promoted oversupply.

The experts state that these issues have wider implications for China’s economy. The country’s GDP accounts for around 10% of the auto industry and related services. Chinese policymakers have long waved off American and European concerns about overcapacity caused by cheap Chinese exports, but Chinese officials have pledged to cool price wars in electric vehicles and solar panels in recent months.

According to consultancy Gasgoo Automotive Research Institute, Chinese automakers have the ability to make twice the 27.5 million cars they produced in 2024. The issue is particularly severe in gasoline cars, where demand collapsed as Beijing promoted EVs, while the number of EV factories mushroomed as companies and local authorities jumped in.

Another consultancy, AlixPartners, estimates that only 15 of the 129 electric vehicle and hybrid brands in China will be financially sustainable by 2030. This price war is now in its third year. Allowing that to happen would mean allowing many automakers to fail, an outcome that some analysts say would risk mass layoffs and falling consumer spending, an outcome many Chinese officials have resisted.

Yuhan Zhang, principal economist at The Conference Board’s China Centre, said, “That leaves automakers and local governments locked in a downward spiral. They feed and reinforce one another, trapping the market in a vicious cycle.”

This is not only a problem for Chinese automakers. Foreign brands are losing market share, with Chinese car sales going to foreign brands in the first seven months of this year at 31%, down from 62% in 2020, according to the China Association of Automobile Manufacturers (CAAM).

European governments are concerned that affordable Chinese-made cars will undermine their domestic automotive industries. In contrast, the United States has effectively banned Chinese cars due to national security risks and allegations of unfair competition.

Attracting EV manufacturers

The origins of this market date back to the 1990s in Beijing, when national policymakers aimed to position China at the forefront of significant technological changes, particularly in the auto industry. This shift occurred as people began transitioning from internal combustion engines to electric vehicles.

In 2009, it bought out a programme to promote automakers who are producing electric vehicles and consumers purchasing these cars, by bringing billions of dollars in subsidies. As a result, the EVs had not caught on by 2017.

That year, government officials drafted a car-making policy blueprint, a 13,000-character document known as the “Medium-and Long-Term Development Plan for the Automotive Industry,” which laid out a target of 35 million vehicles produced annually by 2025, twice the American annual sales record.

Chinese authorities, who had been trying to rein in an overheated property sector, started to discourage excess investment. The automaking blueprint became an expedient second economic pillar for local governments that had relied on land sales and real-estate tax revenue.

The 2017 plan also fanned a rush by local authorities to court electric vehicle makers. In 2024, China almost reached the goal, building over 31 million, according to the China Association of Automobile Manufacturers (CAAM).

The competition has set a playbook across China. The local governments offer incentives to automakers, and expect production and tax-revenue goals in return. Also, automakers have often prioritised meeting those goals over turning a profit, and over time, local governments have kept manufacturers that might have gone under in other markets afloat.

The right automaker can also be a massively profitable bet. The county government in Changfeng, Anhui province, lured BYD in 2021 with inexpensive land, and in return, the county, which was once the main producer of traditional flatbread, received a mega-factory from the EV maker.

Experts say they have calculated from property-sales filings published by the Chinese government that over five years, BYD bought 8.3 square kilometres of land in Changfeng at an average price 40% below the average price paid by other buyers.

In 2023, the year after BYD began production in Changfeng, the county’s economic growth outpaced the national rate by 9.1 percentage points. It was 5.6 percentage points higher in 2024.

The Chinese smartphone maker Xiaomi started acquiring land in Beijing’s Yizhuang district for an electric vehicle factory in 2022, buying more than 206 soccer fields’ worth at an average price 22% below what others paid for industrial land, land-sales filings show.

Beijing mandated that the plant have a minimum annual revenue of 47 billion yuan, or about $6.6 billion, at full production. Xiaomi followed an open bidding process and did not receive discounts or incentives for the land, and it was the only bidder, according to tender information posted by Beijing’s municipal government.

In China, the Guangzhou officials published a policy document in June 2025. However, it stated that the city would aim to develop up to three makers of “new energy vehicles,” including fully electric cars and hybrids, to each produce 500,000 vehicles a year, while awarding up to 500 million yuan (about $70 million) a year to each automaker that built new production lines and made 100,000 vehicles in three years.

At least six other local governments between 2023 and 2025 issued policies to encourage automakers to expand output, policy documents show. Earlier this year, Chinese authorities began to raise the alarm about auto price wars, saying competition was unsustainable. In July, President Xi Jinping chided provincial officials, asking why every province was rushing to invest in a small number of technologies, including electric vehicles and artificial intelligence.

Automakers’ impossible growth

Excess capacity driving aggressive sales targets isn’t limited to China. General Motors, Ford and Chrysler had too many factories making too many cars in the early 2000s, and shut down more than a dozen plants in the United States. Pressure to meet sales targets and gain market share is higher in China, industry analysts and former executives say.

In recent years, the industry has started referring to this kind of competition as involution, a concept that describes self-destructive competition that rewards irregular practices.

Liang Linhe, the chairman of Sany Heavy Truck, one of China’s largest truck makers, said vehicle manufacturers are compelled to keep selling and producing, even at a loss, because this generates cash flow, which is essential to survival.

“It’s like riding a bicycle: As long as you keep pedalling, you might feel exhausted, but the bike stays upright,” Linhe said.

As losses mount, many carmakers are pedalling faster, leading some analysts to talk about a shakeout. In early 2025, EV brand Neta shut down operations after its parent filed for bankruptcy.

In 2024, Chinese tech company Baidu and automaker Geely laid off workers and restructured their joint venture, Ji Yue Auto, which was facing fierce competition.

Still, some say that an abrupt shock is unlikely. Consolidation could take years, and local governments would likely support struggling automakers, limiting the impact.

Michael Pettis, senior fellow at Carnegie China, said, “The problem of excess capacity in China is a systemic problem.”

The chief executive and co-founder of Chinese electric vehicle startup Xpeng, He Xiaopeng, said in 2023 that each automaker would have to sell three million cars a year by 2030 to stay alive, and only eight would survive by then. Xpeng sold 190,000 cars in 2024. A handful of large players are reaching or close to those volumes, and are well placed to be the survivors in a cull.

Geely said it aims to achieve five million vehicle sales per year by 2027, more than double the 2.2 million it sold last year. It is still unknown whether that target still applies. BYD, the industry leader, has set aggressive targets for 2025, but has slowed its expansion.

Its quarterly profit fell for the first time in more than three years in August, and it has internally adjusted its original plan to sell 5.5 million vehicles to at least 4.6 million. Most industry players are selling a fraction of that.

In 2024, as state-owned automakers like Changan, Dongfeng and FAW lagged their private peers in the EV race, the national regulator of government-owned firms announced that it wanted the state companies to expand market share and production, rather than profitability.

The automakers and the regulator, the State-owned Assets Supervision and Administration Commission, have not made any official statement regarding this so far. Changan stated that it aimed to quadruple sales of new-energy vehicles by 2030.

Will the market die?

Reuters reported that an influx of new cars has made it more challenging for dealers to turn a profit. This assessment comes from Chen Keyun, a retired dealer in Jiangsu province, and is supported by four other dealers.

Chen said the problems, such as dealers selling new cars at a loss and offloading them to traders who sell them on as zero-mileage “used” cars, are rooted in China’s “production-oriented” industrial model.

“Automakers have ignored the true level of demand but kept expanding capacity and increasing sales targets, forcing dealers to take more inventory,” he said.

A survey by the China Automobile Dealers Association reported that only 30% of dealers are profitable in August. The dealer groups in Henan, Sichuan provinces and the Yangtze River Delta publicly raised these issues and problems in June.

“We urge automakers to formulate sales guidance policies that align with market realities. If the sales channels collapse, the market will die!” the Henan Automobile Industry Chamber of Commerce said in an open letter to unspecified automakers.

Chen also stated that larger dealerships overpurchase inventory to hit automakers’ sales targets and obtain factory rebates.

“If you have managed to sell 16 out of the 20 units targeted for the month, what will you do with the remaining four units on the very last day of the month?” said one dealer in Jiangsu.

He went on to say that selling those cars even at fire-sale prices would mean qualifying for a bonus of around 80,000 yuan, or $11,200, and put him close to break-even.

Lang Xuehong, a deputy secretary-general of the CADA industry group, said dealers were selling at up to 20% below their cost, a level never before seen. In July 2025, EV brands Neta and Zeekr inflated sales in recent years, with Neta doing so for more than 60,000 cars.

The automakers had cars insured before they were sold so that the vehicles could be booked formally toward monthly sales targets. Neta’s parent, Hozon, which is in bankruptcy administration, could not be reached for comment.

Zeekr told Reuters in July that the cars had been insured with mandatory traffic insurance to ensure their safety while on display, and that they were legally new when sold to buyers.

Neta and Zeekr represent a widespread padding of sales figures across the industry, much of it involving zero-mileage used cars that have been insured and booked as sold, according to dealers and analysts.

Dealers and traders then export those cars as used, often with the blessing of local governments, or market them domestically through grey markets, as four regional dealer groups accused car companies of doing in June.

A livestream sales

In a rooftop parking lot at a mall in Chengdu, Wang Lihong rides a scooter with a selfie stick, shooting video for social media while livestreaming for Zcar, a grey-market trader that flips brand-new vehicles that dealers couldn’t sell. Hosts like Wang stream on platforms like Douyin, China’s TikTok.

Wang, who has 1.25 million followers, said recently that Zcar was Sichuan province’s largest seller of zero-mileage ‘used’ cars, available in March, June, September and December, “when dealers rush to meet the quarter or annual sales targets set by the automakers for cash rebates.”

The marketing director for Zcar, Zhou Yan, said that because it sources some vehicles directly from automakers in bulk, it can sell at deep discounts. Zhou also said that Zcar had acquired more than 3,000 Malibus in China from SAIC-GM, the American automaker’s Chinese joint-venture entity, and was selling them for under $14,000 apiece, down from a sticker price of $24,000.

GM told Reuters that “authorised dealers are the only official channels for our vehicle sales”, and that Zcar “isn’t a dealer affiliated in any way” with SAIC-GM.

Zcar said its Cheshi subsidiary bought 3,428 Malibus for wholesale distribution to dealers. Zcar also said it sells “popular, attention-getting models to draw people into our stores” and often sells at a loss.

The Malibus have not been reported in any previous trade. Audi did not have an opinion on what Zcar is doing, but said it does not condone grey-market trade, which it considers detrimental to the long-term value of its vehicles.

China’s auto industry hit a record in 2024, producing over 31 million vehicles as NEV production surged past 12 million. But too much capacity and excess inventory are creating real risks. The rapid growth that was once praised now threatens long-term stability, as fierce competition and price cuts could undercut profits for many automakers. Without better coordination, China’s car boom could turn into a costly overhang for companies and the economy alike.

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