America’s retreat strengthens China’s grip on the global EV market

DETROIT — The unraveling of the U.S. push for electric vehicles is raising concerns about the existential crisis of the U.S. auto industry as Chinese automakers leap forward with technology that many still believe will define the next era of automobiles.

The latest red flag came on Friday, when Stellantis disclosed a $26 billion charge for a major business overhaul that included exiting EVs, causing the company’s shares to plummet by more than 20%. CEO Antonio Filosa claimed the blow was caused by overestimating the pace of the energy transition.

This follows other U.S. automakers largely retreating from pure EVs in favor of gas-guzzling heavy-duty trucks like the Ford F-150 and SUVs like the Chevrolet Suburban. Chinese automakers are taking the opposite approach, growing globally around EVs.

legacy car manufacturers general motors and ford motor Companies are losing billions of dollars on EVs and are retreating due in part to the loss of federal tax credits and weak consumer demand.

flat teslaThe EV industry pioneer is facing pressure. Elon Musk’s brand has lost appeal and market share in Europe this year, losing ground in EV sales to Chinese automaker BYD, which has increased exports there and around the world. Tesla last week canceled two of its oldest and slowest-selling electric cars as it repurposes U.S. factories for humanoid robots.

After years of leading the electrification movement, Musk seems increasingly focused on other areas, particularly robots, driverless taxis, and his artificial intelligence company, which merged with SpaceX in the biggest merger in history.

Meanwhile, the global market share of Chinese brands has soared nearly 70% in five years, and many experts see this as a threat to American automakers, including the expected expansion of Chinese brands into the United States.

There are concerns among global automakers that Chinese rivals such as BYD and Geely could flood the global market, causing domestic production and vehicle prices to fall. Although the United States has taken a protectionist approach by imposing 100% tariffs on EVs imported from China, Chinese automakers are expanding into Europe, South America, and other countries.

Companies in the United States, where the auto industry accounts for about 5% of gross domestic product, are concerned about the long-term impact.

“China’s auto industry poses an existential threat to traditional (automakers),” said Terry Wojchowski, a former GM executive and president of engineering consulting firm CareSoft Global’s automotive division.

Several auto experts used the word “survival” when discussing the growth of Chinese automakers.

“The existential risk to the U.S. auto industry is not just China’s EVs, but a combination of sustained government support, vertically integrated supply chains, and speed,” said Elizabeth Clare, CEO of the Center for Automotive Research. “These benefits reduce costs and accelerate execution. At the same time, the saturation of China’s domestic market is driving automakers to aggressively expand into global markets.”

China’s automobile sector has rapidly transformed from a closed industry to the world’s largest automobile exporter since 2023.

Experts say China’s growth is being fueled by government funding for businesses and the culture of innovation and speed the country has instilled in its workers. Additionally, the slowdown in the Chinese market and the lack of full factory utilization are forcing companies to start exporting to the world’s major auto markets.

According to GlobalData, the expansion of EVs in China has been particularly impressive, with a worldwide increase of nearly 800%, driven primarily by sales in China increasing from approximately 572,300 units in 2020 to 4.95 million units in 2025. According to the company, EV sales outside China increased by more than 1,300%, from less than 33,000 units to more than 474,000 units.

While China has grown, Detroit’s “big three” automakers (GM, Ford, and Stellantis, the parent company of Chrysler, which is no longer based in the U.S.) have seen their combined sales decline from 21.4% in 2019 to an estimated 15.7% in 2025, according to S&P Global Mobility.

That compares with China’s largest automakers BYD and Geely, which grew from less than 3% market share to an estimated 11.1%, according to S&P Global Mobility.

China recently announced its expansion into Canada, a relatively small auto market that has eliminated 100% of tariffs on imported cars from China amid trade tensions with the Trump administration.

This follows Chinese automakers’ rapid growth in lower-income and less established regions, such as South America, India and Mexico, which have historically been growth markets for U.S. automakers. It has also expanded into Europe, where it accounted for virtually no sales in 2020, but rose to nearly 10% in December, according to Germany-based Dataforce.

“The transition to electrification has made it easier for them because they now have the right products,” said Al Bedwell, global automotive powertrain expert and director at UK-based GlobalData. “The fact that it’s electric really opened the door. Otherwise none of this would have happened.”

Bedwell said China wants to get out of oil because it doesn’t have huge amounts of oil on its own. “I saw it as an opportunity to be a leader,” he added.

GlobalData predicts that China’s EVs will continue to grow globally to approximately 6.5 million units by 2030, and reach approximately 8.5 million units in 2035. This includes continued growth in the United States, where several Chinese-made vehicles have been imported in recent years, including the Buick Envision.

“Entering the U.S. market successfully and sustainably is not easy. It takes time, investment, patience and a willingness to make product mistakes and improve until they are right,” said Stephanie Brinley, principal auto analyst at S&P Global Mobility.

Mr. Brinley is from Japan. toyota motors From 1957 to 2001, the market share reached 10%, and South Korea’s Hyundai Motors reached 10% in 2022, 26 years later.

“The U.S. is a mature market, with sales expected to remain between 16 million and 16.5 million vehicles through at least 2035, so new entrants will take share from established brands and automakers,” Brinley said. “It remains to be seen how quickly they will connect with consumers and which automakers will lose sales or market share to new competitors.”

The Alliance for Automotive Innovation, a lobbying group representing nearly every automaker in the U.S., wants to prevent that from happening. In December, the party called on Congress and the Trump administration to block Chinese state-backed automakers and advanced battery makers from manufacturing in the United States.

“Automakers operating in the United States face geopolitical and market pressures from China that pose a direct threat to America’s global competitiveness and national security,” John Bozella, CEO of the coalition, said in a message to a U.S. House of Representatives select committee, citing unfair and anticompetitive trade practices and intellectual property theft.

U.S. automakers spent billions of dollars developing and launching EVs under Biden administration regulations and incentives that were largely rolled back by the Trump administration.

This deregulation has opened the door for automakers to de-emphasize all-electric vehicle plans.

GM and Ford alone have recently announced more than $27 billion in write-downs due to EV setbacks, including canceling new models and cutting production of current models.

Jeep maker Stellantis on Friday announced a 22 billion euro ($26 billion) hit from a turnaround plan that includes scrapping electrification plans and reintroducing V8 engines to U.S. models.

U.S. EV sales peaked in September ahead of the end of federal incentives, accounting for 10.3% of the new car market, according to Cox Automotive. This demand plummeted to 5.2% of preliminary figures in the fourth quarter.

GM Chief Financial Officer Paul Jacobson said Wednesday that the Detroit automaker, which has become primarily a regional player in North America, has no intention of abandoning EVs and is right-sizing to match natural demand rather than trying to appease regulators.

Asked about the Chinese automaker’s expansion, Jacobson said GM “can sustain itself,” but needs to be on a level playing field, and reiterated that he believes U.S. tariffs should work to offset the subsidies Chinese companies receive from the Chinese government.

“You’re going to see how intense and competitive these vehicles are going to bring to the market, so we have to be ready,” he said at the Chicago Fed’s auto conference in Detroit.

GM was unprepared for the rise of China’s domestic auto industry, which was the company’s largest sales market from 2010 to 2023. The company’s profits from China fell from about $2 billion a year in 2018 to a second straight year of red in 2025 as China grew its auto manufacturing.

GM’s crosstown rival Ford is taking a different approach. The company has largely scrapped plans for larger electric vehicles in exchange for the next generation of smaller models, and CEO Jim Farley believes this will save the company against Chinese automakers.

Farley, who has sometimes praised Chinese automakers, said the new platform will be a simple, efficient and flexible ecosystem for delivering a family of affordable electric, software-defined vehicles.

“This is a Model T moment for the company,” Farley said last year. “We’re looking at Chinese companies, not the world (car manufacturers), as competitors for the next generation of EVs. Companies like Geely and BYD…and that’s how we build our cars.

Domestic EV startups such as Rivian Automotive and is backed by Saudi Arabia lucid group Both companies exclusively produce cars in the United States but are facing profitability and sales challenges.

Amid demand issues, EV startups are following in the footsteps of U.S. EV industry leader Tesla and trying to appeal to investors by promoting themselves as technology businesses rather than automakers.

Tesla’s Musk has been warning about Chinese automakers for years, saying such companies would “destroy” global rivals without trade barriers in 2023 after the rise of BYD.

Mr. Musk has long positioned Tesla as a technology company that also sells cars, even though the bulk of Tesla’s revenue comes from selling, leasing and repairing cars. He went a step further in the company’s latest quarterly earnings report, saying Tesla will end production of the Model S and Model X and instead use its Fremont, Calif., factory to build the Optimus humanoid robot.

These two models are Tesla’s oldest vehicles after the original Roadster. The company began selling the Model S sedan in 2012 and the Model X SUV three years later. These represented only about 3% of Tesla’s sales in 2025, and the company continued to offer the Model Y, Model 3, and Cybertruck.

In recent years, the company has been lowering the prices of these vehicles as global competition for electric vehicles intensifies.

Musk believes China will once again be the company’s main competitor in its latest humanoid robot venture.

“China is definitely going to be a tough competition, because it’s not an either/or,” Musk said at the company’s fourth-quarter earnings conference. “So I always think people outside of China underestimate China. China is a next-level ass-kicker.”