As competition in the electric vehicle (EV) market heats up, China’s auto industry is seeing a surge in mergers and strategic alliances, heightening pressure on South Korean automakers.
State-owned automakers Changan Automobile and Dongfeng Motor are in talks to merge in a bid to strengthen their EV capabilities. If the deal goes through, the combined entity would become the world’s seventh-largest automaker, surpassing Ford, with an estimated annual sales volume of 5.1 million vehicles. Meanwhile, BYD, China’s top automaker, announced on Feb. 10 that it will equip all its models with a new autonomous driving system. The move underscores BYD’s growing ambitions in self-driving technology after it overtook Tesla in global EV sales.
Chinese automakers are also deepening ties with domestic battery manufacturers to cut costs and enhance performance. CATL, the world’s largest battery maker, partnered with SAIC Motor in January to co-develop EV batteries and advance battery-swapping solutions. In 2024, CATL also joined forces with Nio, further reinforcing its strategy of collaborating with local firms.
South Korean automakers are feeling the squeeze as Chinese companies climb the global rankings. In 2024, BYD and Geely Group entered the world’s top 10 automakers for the first time, ranking eighth and tenth, respectively. While most major automakers, including Hyundai Motor Group, saw sales decline last year, BYD and Geely posted substantial growth of 41.5% and 22%, respectively.
With the U.S. and European Union tightening trade restrictions, Chinese automakers are aggressively expanding into emerging markets in Southeast Asia and Latin America, rapidly gaining market share. Hyundai is also pivoting to these regions as economic slowdowns weigh on sales in Europe, setting up a direct clash with Chinese brands. In the six major ASEAN markets, China’s share of the EV sector surged from 7% in 2021 to 52% in 2023.
“In emerging markets, price competitiveness is crucial,” an industry official said. “Since Chinese automakers source key components like batteries domestically, it’s tough to match them on cost. Their influence in overseas markets is only going to grow.”
