China's auto sales experienced a decline in July, with a 5% drop compared to the same period last year, according to the China Association of Automobile Manufacturers. However, exports of electric vehicles (EVs) witnessed a significant increase of approximately 20% as Chinese automakers expanded into global markets.

Passenger car sales totaled around 2 million units, with 1.6 million sold within China, indicating a year-on-year decrease of 10%. On the other hand, exports of passenger vehicles soared by over 20%, reaching 399,000 units. Notably, more than half of all vehicles sold were categorized as "new energy vehicles," including electric and plug-in hybrid cars.

Chinese automakers have been scaling up their exports as demand in the domestic market has slowed down and the United States and the European Union increased tariffs due to alleged unfair advantages provided by Beijing's government subsidies. In response, China's Commerce Ministry submitted the provisional tariffs imposed in July to the World Trade Organization for dispute settlement.

The ministry criticized the EU's preliminary ruling, stating that it lacked factual and legal basis, violated WTO rules, and undermined global cooperation in addressing climate change. It urged the EU to correct its alleged wrong practices immediately and maintain the stability of China-EU economic and trade cooperation, as well as the electric vehicle industry supply chain.

To revitalize demand, counteract slowing economic growth, and promote environmentally-friendly transportation, China has expanded incentives to encourage drivers to trade in their older gas and diesel-powered vehicles for EVs. While overall car sales remained lackluster, EV sales experienced a robust increase of nearly 30% in July compared to the previous year, totaling around 991,000 units. Out of this figure, 887,000 EVs were sold within China, while 103,000 were exported.

Foreign automakers have faced challenges this year, with stalling or declining sales, reflecting intense price competition in an oversaturated market. Chinese automakers, however, continued to grow their market share and accounted for two-thirds of all vehicle sales in July. Sales of Chinese vehicles increased by 10%.

Most vehicles sold in China from January to July were priced between 100,000 yuan to 150,000 yuan ($14,000 to $20,500), as reported by the industry association. In the EV segment, the majority of sales fell within the price range of 150,000 yuan to 200,000 yuan ($20,500 to $28,000).

While companies like Chery Automobile, SAIC Motor, and Geely Auto Group exported more conventional fuel engine models compared to EV manufacturers like BYD and Tesla, the latter are quickly gaining ground in the market. In July, BYD exported 31,000 EVs and hybrids, closely followed by Tesla with 28,000 exports. BYD has held the lead in exports throughout the year, exporting 2.38 million EVs compared to Tesla's 1.76 million.

According to customs figures, the majority of China's auto exports this year found their way to Russia, with 478,000 Chinese-made vehicles imported in the first half of the year, mostly with internal combustion engines. Mexico came in second, importing 226,000 vehicles, followed by Brazil with 171,000.

As the auto industry grapples with shifting consumer demands and increasing competition, Chinese automakers are seeking to capitalize on the growing global market for EVs, while also addressing the challenges posed by tariffs and trade disputes.

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