China has claimed the title of the world’s largest exporter of cars, surpassing Japan in the first quarter of the year, according to China’s General Administration of Customs. It reported an export volume of 1.07 million vehicles in this period, marking a significant 58% increase from the first quarter of 2022. Meanwhile, Japan’s vehicle exports marginally rose by 6% to stand at 954,185 units.

Driving the Change: Electric Cars and Russia

China’s soaring exports were largely influenced by the escalating demand for electric cars and increased sales to Russia. A shift from fossil fuels, driven by worldwide efforts to mitigate climate change, is helping catalyze China’s automobile industry.

Electric vehicle exports, also referred to as new energy vehicles (NEVs), witnessed a dramatic rise of over 90% compared to the previous year. Major Chinese NEV exporters include Tesla’s China arm, SAIC, and BYD, backed by seasoned US investor Warren Buffett.

A Tesla Tale

Tesla, with its expansive manufacturing plant in Shanghai, exports to various regions such as Japan and Europe. The plant, famously known as the ‘Gigafactory‘, is capable of producing 1.25 million vehicles per year, and Tesla has plans to increase this capacity further. Recently, the Gigafactory started manufacturing Model Y sport utility vehicles for export to Canada.

Navigating Through Trade Sanctions

A surge in Chinese exports to Russia has been observed since the onset of the Ukraine war, as Western countries imposed trade sanctions on Moscow. Consequently, Chinese automakers such as Geely, Chery, and Great Wall witnessed a hike in their market share in Russia, while competitors like Volkswagen and Toyota retreated from the Russian market following Ukraine’s invasion.