A new industry report says established automakers may struggle to compete with Chinese manufacturers on affordable electric vehicles, especially as buyers place more importance on software features.
Here's what to know
According to the Los Angeles Times, the report "New Order: China, the West and the Battle for Automotive Advantage" said traditional automakers are unlikely to keep pace with China-based rivals on price in the mass market.
According to Bloomberg, the analysis said Chinese companies are advancing through sheer scale, faster vehicle development, and lower costs.
It also stated that legacy carmakers may no longer hold the early lead they once had in EVs and software-developed vehicles. Mobility Global — which spun off from S&P Global Inc. in July 2026 — described the shift as structural, not a temporary pricing fight.
More background
Mobility Global said China's rise in the auto sector resembles the earlier expansion of Japan and South Korea, but with a focus on software. The edge is not just producing vehicles more cheaply, but also offering a "software-driven experience with rapid feature updates."
The report noted, "This shock is different because China's advantages are much harder to replicate." It added that the pricing edge is strengthened by "preferential financial and supplier-backed working capital," support that competing automakers may find difficult to match.
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A supply glut is also intensifying the pressure. Bloomberg reported that S&P Global Ratings expects auto sales in China to keep falling through 2028 before leveling off at about 20 million vehicles a year, leaving a crowded field of manufacturers chasing fewer domestic buyers.
Vittoria Ferraris, a credit analyst at S&P Global Ratings, said, "China's weak domestic demand will continue driving excess production to accessible global markets such as Southeast Asia, Europe, South America, the Middle East, and Africa, creating disruptive competitive pressures across the industry."
What's being done?
Some governments have already responded by restricting or effectively blocking vehicles shipped from China. However, Mobility Global said those restrictions will only drive Chinese automakers to build vehicles inside overseas markets.
In fact, the report said China-based manufacturers are already pursuing joint ventures with some established European automakers. That approach allows them to tap existing logistics networks and workforces while bringing their own supply chains for core components.
The firm projects that by 2030, output from new European greenfield plants will exceed production from older brownfield facilities, with localized Chinese-brand production expected at near 1.1 million vehicles.
Calum MacRae, Mobility Global executive director and one of the report's authors, said brownfield sites offer a "low risk, low friction option" before companies make larger investments.
BYD Co., China's largest carmaker, is building a factory in Hungary and considering additional factories in France and Spain. Stella Li, who leads the company's overseas business, told Bloomberg that BYD plans to hire up to 40,000 workers in Europe by the end of the decade.
In the United States, imports from China remain largely blocked. MacRae said it is difficult to predict whether Chinese automakers will penetrate the U.S. market, but he noted that brands like Great Wall Motor Co. make a broad mix of vehicles, including pickup trucks, that might one day appeal to cost-sensitive American buyers.
"The competition is just going to become more intense," MacRae said.
Where can I learn more?
EVs are trending as gas prices keep rising, and automakers worldwide are doing what they can to keep up with China.
• U.S. buyers may be last in line as Chinese brands expand affordable EVs abroad.
• In Europe and the U.S., China's EV makers are leaving legacy rivals behind.
• Across global markets, Chinese EV makers are racing ahead while the U.S. risks falling behind.
• Volkswagen plans to use next-gen EV tech from China to cut costs on new models.
• Battery makers in China have built an LFP battery advantage the West still struggles to match.
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