The world's carmakers are struggling to compete with China

Global automakers are in a struggle for survival as Chinese rivals, now leading in electric vehicles, batteries, and software, reshape the industry [1]. Foreign brands' market share in China has halved since 2020 [1]. Honda CEO Toshihiro Mibe stated, 'We have no chance against this' after visiting a highly automated Chinese factory [1]. Ford's Jim Farley similarly warned Western carmakers are 'in a fight for our lives' [1]. The International Energy Agency estimates it is at least 30% cheaper to produce a small electric SUV in China than in more advanced economies [1]. This dominance is the result of a decades-long industrial build-up. China's automotive industry, the world's largest by production since 2008 [2], was transformed by foreign joint ventures and strategic policy, with initiatives like 'Made in China 2025' prioritizing electric vehicle manufacturing [2]. The competitive pressure is accelerating innovation within China. Tech giants like Xiaomi, Huawei, and Alibaba are now making EVs, and companies like BYD and XPeng are pushing into robotics and ultra-fast charging [1]. BYD, which ended production of purely internal combustion vehicles in 2022 [3], leveraged vertical integration to become the world's largest electric carmaker in 2025 [3]. In response, foreign carmakers are reversing traditional technology flows. Volkswagen is paying $700m for access to XPeng's software architecture [1], while Stellantis signed a €1bn deal with Dongfeng [1]. However, General Motors reported a more than 21% sales decline in China in early 2026 and has written down billions from its operations there [1]. The shift reflects China's broader economic rise as a recognized great power, capable of exerting influence through industrial and technological strength [4].