China’s electric vehicles advance and force adaptation of traditional automakers around the world By Jeronimo Santos
7 min read
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The global landscape of the automobile industry, which for decades was dominated by a select group of Japanese, German and American manufacturers, is witnessing a significant transformation. For much of the 2000s and 2010s, these established brands maintained unquestionable leadership in the industry.
At that time, no Chinese automaker had reached the highest levels of global automobile production, and Tesla was still a company focused on a specific market niche.
However, rapid economic growth in China has driven record sales and profits for many of these traditional brands, shifting the industry’s center of gravity as of the 2020s.
Although Japan’s Toyota and Germany’s Volkswagen Group remain among the world’s largest automakers, Chinese electric vehicle (EV) makers such as BYD have quickly gained a share of the global market.
This rise of Chinese brands is beginning to expose weaknesses in the strategies of older companies, demonstrating a structural change in the sector’s competitive dynamics.
Honda Motor, for example, recorded an operating loss of approximately 400 billion yen (equivalent to US$2.55 billion) in the last fiscal year, marking the first time in almost 70 years that the Japanese company has faced such a financial situation.
Nissan also announced, in May 2025, the closure of factories and the layoff of around 20,000 employees globally due to the drop in sales in the United States and China, in addition to confirming, last month, the cut of 900 jobs in Europe.
In Singapore, the change in the market was even more notable: BYD surpassed Toyota, becoming the country’s most popular car brand in 2025.
An analysis of the market share of eight vehicle brands over 12 years in Singapore, including those that were among the top three best-selling in the period, revealed a clear pattern.
The fate of the region’s six main traditional brands diverged. Brands aimed at the mass market, such as Toyota, Honda, Nissan and Mazda, saw their market share decrease between 2016 and 2025. The two luxury brands, Mercedes-Benz and BMW, remained stable or registered a slight increase.
However, the performance of these traditional brands was overshadowed by the significant growth of new electric vehicle manufacturers.
BYD’s market share in Singapore jumped from 2.5% in 2022 to an impressive 21.2% in 2025, while Tesla saw its share grow from 2% in 2021 to 6.6% in 2025.
According to Professor Martin Krzywdzinski, director of the Weizenbaum Institute in Berlin and an expert on the automobile industry, the transition to electric vehicles has “opened a window of opportunity” for new competitors.
He explains that this growth was “compounded by errors in judgment on the part of traditional manufacturers regarding the pace of change and, above all, the speed with which Chinese companies would develop competitive vehicles.”
The main factor driving the emergence of new EV companies was the initial and large-scale investment in electric mobility, as noted by Professor Krzywdzinski.
Tesla pioneered crucial battery innovations and the “software-defined vehicle” concept, changing consumers’ expectations about a car’s functionality.
“Chinese companies followed this path, supported by China’s systematic industrial policy, which led to the emergence of a very strong battery manufacturing sector”, added the expert.
This Chinese policy included robust charging infrastructure, subsidies for local buyers, and significant support for battery manufacturers and component suppliers.
China’s massive investments in production scale have become difficult to match, while many traditional manufacturers have been slow to react. The adoption of electric vehicles in Europe and the US has been slower, in part because these markets have invested much less in infrastructure and have not had an active industrial policy to support the transition, explained Professor Krzywdzinski.
Traditional automakers also underestimated the potential of the Chinese market and continued to focus on developing their expertise in internal combustion engines, or gasoline cars.
Professor Stefan Bratzel, director of the Center for Automotive Management in Germany, indicated that traditional carmakers relied on “incremental improvements to existing business models” and underestimated the strategic importance of electrification, software and the platform economy.
“Many popular brands reacted, but often too late, too cautiously or with products that were not convincing enough in terms of price and technology,” he said.
Consumers now expect a “compelling overall package” that is competitive in price, range and charging performance.
“This is where the industry winners and losers are currently being separated,” concluded Bratzel.
The question remains whether the growth of Chinese brands can be sustained in the long term.
Dr Terence Fan, assistant professor of strategy and entrepreneurship at Singapore Management University, explained that the expansion of Chinese brands into markets like Singapore was not a fluke.
“The Chinese brands that came to Singapore are the survivors,” he said, highlighting that many Chinese companies have failed in the domestic market.
“To survive, they need enormous scale to reduce operating costs and sell at lower prices. If they can win in the Chinese market, they can win in many other markets.”
Professor Krzywdzinski, for his part, warned that China’s new competitors could still face “significant problems” with increased competition. He notes that many of these new entrants sell vehicles at a “barely profitable level” to stay competitive, a strategy that may not be sustainable in the long term.
Resale value is also a concern. “Many customers will soon realize that the resale value of many Chinese electric vehicles is very low, while the higher build quality of traditional manufacturers and their strong brands protect against significant depreciation,” the professor highlighted.
Despite these challenges, both analysts agree that the rise of Chinese automakers represents a structural change, not just a temporary disruption.
Traditional vehicle manufacturers are seeking strategies focused on hybrids for the current market.
Mass-market brands say they are offering consumers a variety of powertrain options rather than relying on a single technology.
Borneo Motors, an authorized Toyota dealer in Singapore, said consumer demand still favors hybrid vehicles, adding that the numbers “speak for themselves and strongly prove that our strategy is aligned with real market demand.”
In the first five months of 2026, Toyota registered 2,708 new registrations of hybrid vehicles, with only 45 electric and 95 gasoline.
“Hybrid vehicles represent practical and scalable electrification today. They offer an immediate reduction in carbon emissions without requiring any change in consumer behavior or dependence on public charging infrastructure, which is still in the expansion phase,” said a company spokesperson.
Even so, Borneo Motors has assured that it will maintain a “multifaceted approach” and invest in both hybrid and electric vehicles to expand the options available to consumers.
The executive director of Kah Motor, representing Honda, Nicholas Wong, pointed out that sales figures indicate a “considerable number of customers who prefer gasoline cars”.
Honda recorded 325 registrations of gasoline vehicles and 737 hybrids in the first five months of 2026, with no sales of electric vehicles.
“There is still a lot of satisfaction in driving a car with a gasoline engine, and the numbers prove that,” said Wong. “Customers also know that this will be the last chance to buy a car with a gasoline engine before 2030.”
Honda’s latest electric vehicle, the Super-ONE EV, was launched in Japan in May and is now on sale in Singapore.
Nissan and Mazda did not respond to questions about their strategies for adapting to the transition to electric vehicles.
Luxury brands, for now, are able to maintain their position in the market.
While mass-market brands lost ground, luxury brands such as BMW and Mercedes-Benz remained stable or even grew.
BMW’s market share in Singapore increased from 6.2% in 2015 to 9.7% in 2025. Mercedes-Benz’s remained stable, rising from 9.4% in 2015 to 9.2% in 2025.
Rene Gerhard, general director of BMW Group Asia, said that although new competitors compete strongly on price and innovation, BMW is focused on consolidating its brand as a premium brand.
“We welcome tougher competition as it drives the industry forward, but we remain disciplined in our approach, continuing to focus on delivering a truly differentiated premium experience that goes beyond technical specifications,” said Gerhard.
Marcel Mustelier Perez, president and CEO of Mercedes-Benz Singapore, highlighted that customers choose the brand for more than just the price.
“They are making a decision about the type of ownership experience they want, and that is something built over 140 years, not replicated overnight.”
Victor Kwan, an associate professor at the Singapore University of Social Sciences with 20 years of experience in the automotive sector, explained that premium brands have remained protected because Chinese manufacturers compete mainly in the mass market segment.
“Brand value is something intangible and needs to be built over time, with history and identities constantly evolving,” he said. “It will take time for Chinese brands to build their own aura of prestige.”
However, Kwan warned that as Singapore and other markets move towards mandatory all-electric vehicles, luxury brands will have “no other option but to try to compete in the electric segment”.
He noted that premium brands have struggled to justify a higher price for their electric vehicles – in part because EVs are “essentially computers on wheels”, with little differentiation in terms of engineering or driving characteristics.
“Its traditional advantages will certainly get weaker,” Kwan predicted.
Analysts, however, emphasize that the long-term challenge for automakers goes beyond competing in any specific market segment.
“Not all new electric vehicle manufacturers will be successful in the long term, but the balance of power is clearly shifting towards companies that systematically combine electrification, software, cost leadership and direct customer access”, pondered Professor Bratzel.
“The decisive question will be which manufacturers will be able to transform from traditional vehicle producers into technology- and service-oriented mobility providers, and which will remain stuck in the old industrial paradigm.”
