Auto China 2026, the world’s largest car show, has exposed how deeply Chinese manufacturers have outpaced their global rivals in electric vehicles, batteries, design and software.
The BBC visited factory floors in Beijing and Hefei, finding striking levels of automation and software development speed that are leaving foreign brands struggling to keep up.
Honda chief executive Toshihiro Mibe was blunt after touring a highly automated factory in Shanghai, telling Japanese media: “We have no chance against this.”
Ford chief executive Jim Farley has similarly warned that Western carmakers are “in a fight for our lives” as Chinese rivals continue expanding into global markets.
Shanghai-based auto analyst Bill Russo argues the stakes go far beyond electric vehicles: “The biggest mistake that the developed world is making is believing that the transition is only about electric cars. It’s about who will lead the next generation of mobility technology.”
China now leads exports in more than 315 product categories, up from 163 in 2016, according to a Rhodium Group report, with many linked to electric vehicle supply chains including batteries, components and manufacturing machinery.
The International Energy Agency estimates it is at least 30% cheaper to produce a small electric SUV in China than in more advanced economies, largely because of lower battery costs and elaborate supply chains.
Rhodium estimates China has channelled tens of billions of dollars into EV and battery manufacturing in recent years, with those subsidies heavily criticised in the EU and the US for distorting markets.
Competition within China has accelerated innovation further, with Tech giants Xiaomi, Huawei and Alibaba all now producing electric vehicles and pushing consumer technology directly into the car industry.
Inside Xiaomi’s factory outside Beijing, a car rolls off the production line roughly every 76 seconds, and the company has become one of China’s top-selling brands after launching its first EV in 2024.
BYD has developed ultra-fast charging systems capable of adding 400km of range in around five minutes, comparable to the time needed to refuel a petrol car at a filling station.
XPeng founder and CEO He Xiaopeng told the BBC the company is prioritising humanoid robots and flying cars alongside electric vehicles, stating: “In the next decade, any car company will also be a robotics company.”
Foreign brands’ share of China’s car market has collapsed from 64% in 2020 to just 32% this year, according to consultancy Automobility, hitting earnings at General Motors and German manufacturers that once relied heavily on the market.
Huawei’s Maextro S800 luxury sedan has become China’s best-selling car above $100,000, outselling Porsche Panamera and BMW 7-series imports combined, brands that previously dominated the premium segment.
Volkswagen is paying $700m for access to XPeng’s software architecture and autonomous driving systems, technology it has acknowledged it could not develop quickly enough independently.
Stellantis has signed a €1bn deal with state-backed Dongfeng to produce Peugeot and Jeep models in China, and is also exploring producing Chinese-designed vehicles at a plant in France.
He Xiaopeng described the evolving relationship between foreign and Chinese manufacturers as genuinely reciprocal: “We study each other, so we trust each other, so we help each other.”
GM has written down billions of dollars from its China operations and reported a more than 21% decline in sales in the first three months of this year, underscoring the financial damage already sustained.
Chery’s Jaecoo 7 became one of the UK’s best-selling new models within 14 months of its launch, demonstrating that Chinese brands can gain rapid traction in competitive Western markets.
Consultant James Pearson warns that tariffs alone will not contain the challenge facing established carmakers: “If you lock them out of one market, they will just find another.”