Bold claim: cheaper gasoline cars from China may pose an immediate risk to automakers, perhaps even more than the wave of inexpensive EVs some buyers anticipate. As the decade began, the fear was simple: a flood of Chinese brands would enter big markets like the United States and Europe, accelerating competition. While that concern persists, a more pressing threat may be the resurgence of affordable internal-combustion and hybrid vehicles from China, supported by massive export capacity and state backing.
A Reuters investigation reveals that eight of the ten largest selling automakers in China are tied to the more than 6 million gas-powered and gas-electric vehicles expected to be exported globally by the end of 2025 — roughly three-quarters of China’s automotive exports. That marks a substantial jump from about one million exports five years earlier. The trend is driven by the sector-wide overcapacity that has long afflicted China’s auto industry, which remains the world’s largest in terms of output.
Chery Automobile Co. stands out as the top exporter, with most of its outbound shipments through October consisting of gasoline-powered vehicles in one form or another. BYD, the second-largest Chinese automaker, is sending mostly battery electric vehicles abroad so far this year. Tesla, ranking eighth among Chinese exporters, now focuses exclusively on electric vehicles. The core reason for exporting predominantly non-plugged vehicles is China’s heavily subsidized domestic EV market, which has buoyed domestic players but left many foreign brands — including Volkswagen Group, Mercedes-Benz, General Motors, and other U.S. and European companies — with a tougher fight, especially at the higher end. That dynamic has left a surplus production capacity that can be redirected toward non-plug-in models.
With the United States and the European Union signaling a shift away from strict EV mandates by mid-decade, Chinese-owned brands like Volvo Cars and Polestar have protested these changes. Reuters notes that China’s surplus capacity to produce gas-powered vehicles is pressuring automakers, most of whom enjoy government backing, to keep factories running and push into new markets. Industry observers also argue that China should consolidate its roughly three dozen automotive brands to strengthen competitiveness amid a crowded market featuring strong domestic and international names.
China’s top automakers have already set their sights beyond Europe. BYD is expanding its footprint in Brazil and other Latin American markets, and Russia has emerged as another destination for Chinese cars, according to recent reporting. Yet this expansion carries risks. Competing brands with established reputations, loyal customers, and extensive sales and service networks can sustain price levels, offer incentives, and slow the switch to new Chinese offerings in the short term.
A notable caveat is that many Chinese-branded vehicles remain price-driven in consumer perception. For instance, while the XPeng G6, a model seen as a Tesla Model Y rival and headed for Europe, received a largely favorable review from InsideEVs, Autocar in the UK described the Chery Tiggo 7 plug-in hybrid as satisfactory mainly for buyers who simply need a car. This nuance underscores that affordability alone may not win over discerning buyers accustomed to established brands.
Despite these developments, a surge of Chinese cars in the U.S. market remains unlikely in the near term, unless shipments come via Mexico. Ongoing tariff revisions on Chinese-made vehicles and battery packs, along with concerns about China-developed software, have kept the U.S. passenger-car market largely out of reach for many Chinese automakers. As a result, firms like BYD have focused on assembling buses in California, while other components remain subject to tariffs. Foreign brands can still import certain models, but overall volumes for passenger cars are constrained.
The trend toward importing Chinese vehicles persists, but recent moves show a narrowing pathway. Volvo discontinued importing its S90 luxury sedan from China after 2018 production and shifted the EX30 electric SUV’s production to Belgium with 2026 models, choosing not to import a new ES90 luxury model into the U.S. or Europe. General Motors continues to import the Buick Envision from a SAIC Motor joint venture, but the 2026 model carried a roughly $3,000 price increase over the 2025 version. These shifts illustrate the complex calculus automakers face as they balance tariff costs, brand positioning, and domestic production capabilities in a rapidly evolving global market.
