China is on course to overtake Japan and become the world’s biggest exporter of cars by the end of the year, Moody’s Analytics said in its latest report.
According to the findings, China is now challenging Japan, having narrowed the gap to about 70,000 cars per month in the second quarter, compared to almost 171,000 in the same period last year. The country’s exports have reportedly been boosted by demand for electric cars and by sales to Russia. Last year, China overtook Germany to become the world’s second-largest car exporter.
“China made heads turn through the pandemic as it strutted past South Korea in 2021 and Germany in 2022, making it the second-largest car exporter,” the credit ratings agency wrote.
Moody’s economists attribute China’s surging auto exports to a rising demand for EVs, noting that the country’s sales doubled year-on-year in the first half of 2023. A surge in demand for electric vehicles sent overall auto exports from China beyond the levels seen before the pandemic.
At this pace, China is on course to overtake Japan, which has topped the global exports rating since 2019, by the end of the year, the report added.
China produces more than half the world’s lithium-ion battery supply and is home to more than half of the global lithium-refining capacity – two factors that give its car manufacturers a competitive advantage in EV production costs, according to Moody’s.
“Indeed, the speed at which China has embraced new technologies in the automobile industry is unparalleled,” its economists noted.
“Large price cuts by Chinese manufacturers and generous government supports” such as an exemption of a 10% purchase tax for EVs have also contributed to a rapidly growing demand for electric autos, Moody’s explained.
According to the International Energy Agency in April, EV sales jumped to more than 10 million last year, with China accounting for about 60% of the market.
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