Chinas Global Electric Offensive: Between Ambition and Harsh Domestic Economic Realities

From robotaxis to flying cars, China is striving to export more of its cutting-edge automotive technologies – a strategy that reflects both its global ambitions and challenging economic realities.

The world’s second-largest economy houses the largest and most advanced automobile market in the world. However, a years-long price war has left the country with an excess of vehicles, including electric models mass-produced by unknown companies in the West.

Car sales in China dropped by 18% in the first quarter compared to the previous year and are expected to remain stable or decrease in the foreseeable future.

Foreign markets offer the promise of higher margins and significant sales volume growth, according to industry analysts and observers. This means that global growth prospects will be at the center of China’s annual auto show starting on Friday in Beijing.

CHINESE EXPORTS HAVE ALREADY INCREASED

China’s exports saw significant growth last year, with 5.8 million cars exported, nearly 20% more than the previous year, according to industry data.

Total vehicle exports from China, including cars and utility vehicles, are expected to grow by 4% to reach 7.4 million units this year, according to a forecast by the China Association of Automobile Manufacturers published on Thursday.

‘They have reached a point where they know it’s not just about China,’ said Pedro Pacheco, an analyst at research firm Gartner, about Chinese manufacturers.

‘They also need a roadmap to deploy their technology in Europe, Latin America, and Southeast Asia.’

Chinese electric vehicle brand Aito, backed by tech giant Huawei, is among those aiming for international growth. Aito aims to more than double its annual sales to reach 1 million vehicles by 2030, President John Zhang told Reuters.

Zhang specified that Aito, owned by Chongqing Seres Group 601127.SS, expects international sales to represent 20% of total volumes within three years, up from less than 1% currently.

The company plans to enter some Northern European markets this year, where the adoption of electric vehicles is higher.

COMPETITIVE DESPITE EUROPEAN TARIFFS

For now, the United States is effectively closed to Chinese cars.

Chinese electric vehicles are also subject to tariffs in Europe, but they can still be competitive, making European markets a priority for Chinese manufacturers.

Increasingly, cars made in China meet the needs of foreign drivers, analysts say.

‘China is not an emerging country in the automotive industry. It is a leading country at the highest level,’ said François Roudier, secretary-general of the International Organization of Motor Vehicle Manufacturers, to Reuters in Beijing.

American consumers are also showing more interest in Chinese vehicles, according to surveys, although barriers to sales include tariffs of around 100%.

Earlier this month, three Democratic senators urged President Donald Trump to ban Chinese manufacturers from making vehicles in the United States and to prevent Chinese cars assembled in Mexico or Canada from entering the country.

In January, Trump stated that he was open to the idea of Chinese manufacturers producing vehicles in the United States.

He is set to meet Chinese President Xi Jinping at a summit next month. The economic and trade relationship with China is stable, and Trump seeks to keep it that way, said U.S. Trade Representative Jamieson Greer earlier this month.

‘FLYING CARS’ AND HUMANOID ROBOTS

Electric vehicle maker Xpeng plans to begin large-scale production of its ‘flying’ cars next year and its humanoid robots in the fourth quarter of 2026, President Brian Gu told Reuters on Thursday.

Xpeng has received over 7,000 orders for its flying cars, capable of flying as well as driving on roads. Most orders come from China, where the company is working to obtain approval from civil aviation authorities.

The company also plans to launch robotaxi tests in the city of Guangzhou in southern China this year, Gu added, specifying that 2027 will be a ‘critical year’ for ‘tests worldwide with partners’.

Last year, Xpeng generated about 15% of its revenue from overseas sales. In the next five to ten years, ‘over 50% of revenues are expected to come from outside of China’, Gu concluded.