China no longer wants US cars – except Tesla

The increasing focus on e-mobility is making life difficult for traditional American automakers. The market share of Chinese electric car manufacturers in China rose by 17 percent in 2022, while the market share of foreign manufacturers dropped by 11 percent. This is also due to the fact that Chinese car manufacturers build cheaper - and in some cases better - electric cars, which are well received by consumers in China.

“The market has completely changed,” says Jim Farley, CEO of Ford in Detroit, to journalists. “We need to rethink what the Ford brand means in a country like China.”

GM and Ford – Withdrawal from China?

Farley notes that luxury brands, which only sell electric vehicles, perform best in the Chinese markets. Apart from Tesla, US car brands have lost significant ground in China, the largest and most important car market in the world for manufacturers, in the past year. According to the consulting firm Automobility Ltd., GM’s sales there fell by 20 percent compared to 2021, while Ford's sales dropped by as much as 33.5 percent.

"It is pretty much the consensus that U.S. automakers are becoming increasingly irrelevant in China," says Edison Yu, an analyst at Deutsche Bank, to the American online portal Insider. "As we make the transition to electric vehicles, GMs and Fords in China really need to be very bold and aggressive to succeed. At some point, you have to decide whether to push forward or retreat. We have reached a point where a decision about the future has to be made."

Political Situation Adds Additional Difficulty

With the intensification of political tensions between China and the US, engagement in China is becoming increasingly risky for US companies. Additionally, according to Ford CEO Farley, Chinese brands have spent the last few years acquiring industry know-how through joint ventures with US brands, making the Chinese market suddenly much more hostile for American companies.

After the pandemic, supply chains were reconsidered

The pandemic forced automakers to shift their supply chains and focus on markets where they achieve the highest profit margins. For instance, GM led the retreat from loss markets, withdrawing from Europe in 2017 and later from Russia, India, and Australia. The company continues to operate in China but struggles to defend its market share. GM's sales in China fell by 25 percent in the first quarter of 2023, after already decreasing by 20 percent last year.