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China is now the world’s leading exporter of automobiles, surpassing Japan for the first time ever in Q1. Chinese auto manufacturers will look to extend the country’s lead in car shipments by dominating the production and sale of electric vehicles. China has already won a modest share of Europe’s auto market, a foothold which could expand rapidly as the European Union shifts toward a total phaseout of traditional automobiles by 2035.

Breaking into the US market will prove to be a more difficult task, however, as import duties on Chinese-made vehicles remain exceedingly steep. The US government has a vested interest in blocking Chinese penetration of its domestic EV market, which will be needed to sustain mainstream American automakers that have thus far fallen behind on EV and battery development.

Related ETF & Stocks: Global X Autonomous & Electric Vehicles ETF (DRIV), Tesla, Inc. (TSLA), NIO Inc. (NIO), XPeng Inc. (XPEV), Li Auto Inc. (LI)

According to AlixPartners data, China became the world’s top exporter of automobiles in the first quarter, shipping 1.07 million vehicles abroad and surpassing Japan’s quarterly tally near 1.05 million. China’s big export boost can be largely chalked up to rising sales in Russia, which is becoming a much larger trade partner with the world’s second largest economy. As MRP has previously noted, China stepped up its involvement in the Russian economy last year, bolstering annual trade between the two nations to a record $190 billion. Bloomberg notes China sold 112,000 vehicles to Russia in Q1, roughly equivalent to the same amount it sold there throughout all of last year.

The growing international market for Chinese vehicles – particularly electric vehicles (EVs) – is critical for the future of their auto industry. Reuters notes that China’s car exports grew four-fold between 2020 and 2022 to top two million vehicles. China’s EV shipments are expected to reach 1.3 million units in 2023, according to an estimate by market research firm Canalys, versus 679,000 units in 2022.

China’s passenger EV sales have become a fixture of their own auto market, continuing to grow rapidly in recent years. EV sales expanded by 29% YoY in the first quarter and…

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