Five years ago, China’s global car exports were only a quarter of those of Japan, which then counted as the world’s largest car exporter. Since 2023, according to The Economist, China exported five million cars to markets around the world, more than all of Japan’s car exports. And in the fourth quarter of 2023, China’s biggest electric vehicle brand, BYD, sold half-a-million EVs globally, far exceeding Tesla.

South Africa is a beneficiary of the Chinese vehicle export surge. China’s competitive advantage in exporting cars goes beyond the well-appointed and attractively priced internal-combustion engine (ICE) SUVs now seen in abundance on SA’s roads, and includes cutting-edge electric vehicles, the likes of which have yet to make their presence felt in our market.

Read more in Daily Maverick: Two in three cars sold globally could be electric by 2035, says International Energy Agency

China’s own slowing economy has meant that their domestic electric vehicles (EVs)and petrol-powered sales have also slowed, with the result that this excess capacity has forced Chinese carmakers to look abroad to make up lost sales.

Coupled with this, EVs evolve and develop more at smartphone speed than the traditional five- to seven-year cycles on which incumbent Western car manufacturers have built their business models.

Add Chinese scale and urgency to this equation and it becomes clear that Western car firms are in for a spot of disruption.

Western car firms are rightly concerned that China’s EVs, which are better priced and arguably technologically more advanced, pose an existential threat to their dominance.

In today’s fraught geopolitical environment, such fears have taken on political and economic hues, with the EU officially launching an “anti-subsidy” probe into Chinese car makers in September 2023, which, if upheld, would see major punitive tariffs and potential fines being imposed.

Tesla too has felt the chilly wind of Chinese EV competition translate into slower Q1 2024 sales, resulting in the US EV giant simultaneously announcing significant price cuts across the Tesla range while cutting its workforce by 10%.

Read more in Daily Maverick: Tesla speeds up plan for cheaper cars, calming fears about strategy

From a South African perspective, our economic and political alignment clearly tilts in Beijing’s commercial favour (let us not forget that we are the “S” in BRICS).

So, when allegations are levelled that Chinese vehicles are being unfairly subsidised by the Chinese state (via soft loans, government contracts, equity injections and other forms of public support for Chinese industrial champions) should it even matter?

And is there even any truth to this? Well, according to AlixPartners, China’s support for electric and hybrid vehicles in the period 2016-2022 amounted to a staggering $57-billion. So yes, chances are that you are getting a Beijing-funded deal on your local showroom floor.

Does state-backed competition matter when it means that South African car buyers (especially those wishing to drive whizzy SUVs) now enjoy world-class vehicle technology for roughly 40% of the cost of a comparable specification from a Western brand?

The sales results clearly suggest that Chinese cars are zipping off showroom floors in ever-increasing numbers. Chery’s South African unit reported a 100% increase in 2023 sales from 2022, to 16,110 new vehicles. And Haval’s sales increased by 198% in 2023, compared to their 2019 performance, according to BusinessTech.

Recent Chinese ICE vehicle success could just be the warm-up game though, as several Chinese EVs are lined up for launch into the South African market in 2025. EVs are essentially technology platforms that enable mobility, rather than the hydrocarbon and mechanical engineering marvels that defined the first hundred years of the automobile.

And EV platforms rely on superior battery technology and internet connectivity, both of which China has in digital abundance. Think of them as digital appliances on wheels and you get a better idea of the speed of new model innovation which is being unleashed.

Connectivity and electricity, while being affordable and ubiquitous in China, are clearly not as readily available in South Africa. To state the obvious, our connectivity is both expensive and patchy and our electricity woes are well documented.

Should this hold back EV market development in South Africa? I would argue that neither will matter all that much; instead, the largest barrier to EV sales in Mzansi is the lack of a state subsidy. Both Europe and the US have doled out public funds as EV subsidies to get “sticker parity” between electric cars and their petrol-engine equivalents.

Nothing of the sort has yet appeared in South Africa.

In a recent Economist editorial on the subject, the publication argues that the benefits of China’s cheaper and better EVs aid the transition to a greener vehicle fleet while putting money back into consumers’ pockets.

And what cash-strapped car-loving South African is going to object if Beijing saves them a few hundred thousand rands on their new hybrid or electric SUV via implicit and explicit subsidies? DM