Chinese electric-vehicle makers have lost buyers at home and found new ones in Brazil, Thailand, and the Gulf.
Some 540,000 EVs left China in July, a monthly record, while about 980,000 were sold at home, according to a report from Benchmark Mineral Intelligence, a London-based research firm. That worked out to one EV exported for every two sold domestically, compared with one for every five last July.
The move abroad is permanent rather than a response to one bad year, and the price war that has played out inside China for two years is following the cars overseas, Lei Xing, founder of Chinese auto industry consultancy AutoXing, told Rest of World. Chinese cars are inexpensive, widely available, and carry the technology buyers want, much like Japanese and German cars did when those countries built their own export industries, he said.
“The export surge is partially due to overcapacity, but that’s not the only factor,” Lei said.
Sales inside China fell 12% in the first seven months of 2026, and the International Energy Agency expects the market to end flat this year for the first time this decade.
“We’ve moved from export opportunity to export necessity,” Bill Russo, founder of the Shanghai-based advisory firm Automobility, told Rest of World. “The next phase isn’t simply exporting cars. It’s localizing manufacturing, supply chains, and technology overseas.”
Even Tesla is leaning on exports to make up for weak sales in China. Its Shanghai plant sold 238,955 cars inside China in the first half of this year and shipped out 228,994, according to China Passenger Car Association figures published on August 4.
Where the cars are going
EV sales outside China, Europe, and North America almost doubled to 1.7 million units in the first seven months of this year, and Chinese brands supplied half of them, up from a quarter in 2023, according to Benchmark Mineral Intelligence.
“The expectation is that significantly more EVs will be sold in the rest-of-world region this year than in North America,” George Whitcombe, senior EV analyst at Benchmark, told Rest of World.
In the first half of 2026, 2.4 million pure-battery and plug-in hybrid cars were exported from China, more than twice as many as a year earlier, according to China’s customs administration, the state agency that records every vehicle crossing the border.
Chinese brands are too competitively priced to shut out, so governments in Asia and Latin America are setting terms to let them in.
In Thailand, where the top five brands are all Chinese, carmakers that took government subsidies must build two cars locally for every one they bring in, rising to three next year.
Brazil, part of a region where Chinese brands make up almost 90% of EV sales, has raised its import tax on EVs to the same level gasoline cars pay, Whitcombe said. Canada has gone the other way, cutting a 100% tax to 6.1% in March and letting in 49,000 cars a year. Gulf states have set no conditions at all. Trade barriers there are low and appetite for Chinese technology is growing, Russo said.
Chinese factories are turning out cars faster than foreign showrooms can sell them, and clearing the backlog will mean cheaper cars, Russo said. More than a million EVs shipped from China over the past 18 months have yet to be sold, and only about two-thirds of this year’s exports have reached a buyer, according to the IEA.
“Excess inventory means discounting, incentives, and pressure on residual values as distributors clear stock,” Russo said. “We’ve seen this movie before: China can export vehicles faster than overseas retail networks can absorb them.”