China’s automotive industry, a bright spot in the world’s second-largest economy, remains exposed to an escalating US-China tariff war, with component manufacturers likely to bear the brunt of the trade fallout, analysts said.
At risk is the 100 billion yuan (US$13.6 billion) worth of car parts – from electric-car batteries to lidar sensors and drive control systems – that Chinese companies shipped to the US annually, as tariffs on all Chinese-made goods surged to 125 per cent, from just 10 per cent three months ago.
“The sweeping tariffs are destructive to the growth of China’s supply-chain vendors like battery producers, though they would also block carmakers’ access to more advanced parts,” said David Zhang, general secretary of the International Intelligent Vehicle Engineering Association. “Car assemblers may have dodged the bullet as they do not rely on the US market for sales and growth.”
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An index compiled by consultancy East Money Information that tracks 26 mainland-listed carmakers slumped 7 per cent this week through Thursday, while a gauge tracking 230 car component producers dived 10.2 per cent. The Hang Seng Shanghai-Shenzhen-Hong Kong Automobile Index, comprising 55 car and parts makers, lost 9.2 per cent.
China shipped 99.8 billion yuan worth of car components to the US last year, or 15 per cent of its auto parts exports, according to customs data. Sales of Chinese-made cars in the US totalled 116,000 units, representing only 1.8 per cent of its global shipments. Most of the cars were built by General Motors and Ford’s joint-ventures in China, Huatai Securities said in a report last week.
China’s top six electric vehicle (EV) battery producers including Contemporary Amperex Technology and Gotion High-tech hold two-thirds of the global market, according to data compiled by Seoul-based SNE Research. The country’s automotive supply-chain vendors feed almost half of the world’s demand, said Beijing-based Insight and Info Consulting.
China is now the global powerhouse in designing and manufacturing pure electric and plug-in hybrid cars, banking on state support and consumers’ willingness to embrace new technologies. Three out of every five EVs sold worldwide are delivered to Chinese consumers, according to the China Passenger Car Association (CPCA).
Cui Dongshu, the CPCA’s general secretary, said an escalation in trade tensions between US and other countries would eventually have a devastating impact on China’s auto exports.
“The tariffs the US imposes on Southeast Asian nations will wreak havoc on their economies and capital markets,” he said. “The negative impact on our car sales there will turn out to be much more severe than what we expected.”
Southeast Asia has become a major growth engine for China’s car exports as EV makers from BYD to Hozon Auto win thousands of new customers who prefer environment-friendly vehicles.
The Philippines was the third-largest destination for Chinese-made EVs in 2024, with about 130,000 deliveries, data by the China Association of Automobile Manufacturers showed. Thailand ranked fifth with nearly 126,000 deliveries from China.
China’s car exports may grow by only 10 per cent this year, compared with 25 per cent last year, Cui said. Those exports fell 8 per cent to 391,000 units in March from a year earlier, while the first-quarter tally rose 1 per cent to 1.1 million units, according to the CPCA.
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