The Chinese Are BREAKING The Car Market - This is Shocking

This might be the most important

industrial story of the next decade. It

has everything to do with cars and

nothing to do with gasoline and [music]

almost no one in America is talking

about it. So, I brought in my friend

Elliot who has been living in China for

the past 18 years. You might have seen

him on Everything Electric and Fully

Charged. And now he's going to work with

us to tell the story of how the Chinese

EV revolution that's quietly happening

is going to mean huge changes around the

world. So, Elliot, take it away. This is

a Chinese EV and this will spell the end

of the big three in Detroit. It's not a

matter of if, it's a matter of when. But

is this a foregone conclusion or is

there a way for the US automakers to

fight back? My name is Elliot Richards

and this [music] is Two Bit Da Vinci.

This video is brought to you by Anker

Sollex. The Ford CEO drives a Chinese

car. Jim Farley, the man leading one of

America's most iconic automakers, used a

Xiaomi SU7 as his daily driver for half

a year. A Chinese-made electric vehicle

with a 345 mi range that cost about

$30,000. From a manufacturer that until

2024 was best known for making

smartphones and after driving it, he

went public. He called BYD, China's

biggest automaker, the best in the

business. Ford has reportedly even been

in talks with Jile about producing cars

in the United States. That's not

something you'd have heard from a

Detroit CEO 2 years ago. If you walked

around the Beijing or Shanghai Auto Show

today, the expression on the executive's

face is one of shock and confusion. How

has this happened? How do we fix this?

[music]

Something has shifted. And if you're

American or if you care about what the

auto industry looks like in 10 years,

you need to understand exactly what this

shift is and what it means for you.

Because the story of Chinese automakers

isn't [music] really about cars. It's

about one of the fastest industrial

transformations in modern history. And

the United States for now is watching it

happen from behind a wall of tariffs,

[music] hoping that the wall holds.

Let's talk about whether it will. Let's

start with the scale of what we're

talking about. In 2025, China sold 34.4

million vehicles. [music] The United

States sold 16.7 million. China's

domestic market alone is more than twice

the size of America's. And on the

electric side, it's growing nine times

faster. And here's the number that

matters the most. China now accounts for

35.6% of the entire global automotive

market. More than one in three cars sold

on the planet is sold in China. And

Chinese automakers have turned that home

market dominance [music] into a global

export machine. In 2025, China exported

8.3 million vehicles, a 30% jump in a

single year, making it the world's

largest vehicle exporter for the third

year in a row. To put that in context,

Japan, which for decades was the

dominant global auto exporter, has been

surpassed. Germany is fading. And three

Chinese companies, BYD, Julie, and

Cherry, now sit inside the top 10 global

automakers by sales volume. Six Chinese

brands are in the global top 20 compared

to five Japanese. That's a first in

automotive history. BYD specifically

passed Ford in 2025 to rank sixth

globally. J overtook Honda to take

eighth. And it gets worse for legacy

giants. The big three, Ford, GM, and

Stalantis have watched their combined

global market share fall from roughly

21% in 2019 to under 16% in 2025. That's

almost a six-point drop in 6 years. But

the most striking part of the data isn't

China rising. It's foreign brands

collapsing inside China. Honda just took

a 15.7 billion write down, its first

annual loss since 1977. Honda's China

sales fell 31% in a single year. Buick,

a brand that in the 1930s sold more cars

in China than any other, is down 65%

from its 2020 peak. Chevrolet sold over

640,000 cars in China in 2018. By 2024,

that had collapsed to 52,000, a 92%

drop. Mitsubishi sold its Changa plant

to a Chinese EV brand for 1uan. That's

about 14 cents. Hyundai sold its

Chongqing plant for $226 million,

roughly 80% off what it had cost to

build. The Stellantis Jeep joint venture

went from 222,000 cars sold in 2017 to

literally one car sold in May of 2022.

The next [music] month, the venture went

bankrupt. And then there's Russia. After

Western brands pulled out post invasion,

Chinese brands, they took over. Chinese

brand share of the Russian market went

from 8% in 2022 to [music] 62% in 2024.

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>> Now before we go further, a critical

distinction. China's growth story is

largely about electric vehicles. [music]

This isn't a combustion engine story,

and that matters enormously for what

comes next. [music] The speed of China's

EV rise looks from the outside almost

implausible. [music]

But it happened by design, and

understanding how it happened is the

most important [music] part of this

story. First, the government bet

everything on electric. Around 2015,

China's central government decided that

electric vehicles were a strategic

priority, part of their made in China

2025 plan. They subsidized

manufacturers, built charging

infrastructure at a scale [music] no

other country has matched, and created

consumer incentives that made EVs the

economical choice. Those incentives are

not minor. In China, electric and

gasoline cars [music] wear different

colored license plates. green for

electric, blue for gas. And in the

biggest cities, getting a blue gas car

plate is intentionally painful. In

Shanghai, for example, you can't just

buy a gas car and register it. You have

to win a monthly auction for the plate

itself. And those plates can cost more

than 90,000 yen. That's about $12,500.

In Beijing, the lottery for gas car

plate is now one successful out of 333.

In 2025, the city released 160,000

plates in total. 140,000 of them were

reserved for electric vehicles. ICE

buyers fought over the remaining 20,000.

You buy a green NEV plate, it's free.

[music] There's no lottery, no auction,

no purchase tax, no annual road tax, and

the green plate lets you drive on

restricted days and park in city centers

where gas cars can't. When you add it

all up, a Chinese family in Shanghai

buying electric BYD seal versus an

equivalent gas-powered family sedan is

[music] paying about $17,500

less on day one. The Chinese government

didn't just subsidize EVs. They made it

expensive and inconvenient to buy

anything else. Secondly, vertical

integration at a speed Western companies

still haven't matched. BYD doesn't buy

batteries from a third party. They make

their own. They developed their blade

battery inhouse. A lithium ion phosphate

design now considered one of the safest

and most costefficient on earth. When

you control the most expensive component

in the car, your cost structure looks

completely different from everyone

else's. BYD also makes its own chips,

its own motors, and increasingly its own

software. And the engineering scale

[music] is staggering. BYD has roughly

110,000

R&D engineers. [music] That is bigger

than Tesla's entire global workforce.

They file 32 patents [music]

every single working day. And one

Chinese company, CL, makes 39% of every

EV battery sold on Earth and has done so

for 9 years running. Tesla, [music] BMW,

Ford Mercedes VW Toyota and

Stalantis all buy from them. The western

EV is largely a fiction. The Berlin

built Tesla Model Y ships with a [music]

BYD battery. Ford's 3.5 billion battery

plant in Marshall, Michigan runs on CL

licensed technology. And third, price.

[music] This is where it gets

uncomfortable for Americans because the

numbers are stark. The five bestselling

Chinese-made EVs in 2025 average about

$9,888.

The average new car in the United

States $51,456.

The BYD Seagull, their entrylevel EV,

has now sold over 1 million units. Its

price is around $10,000.

China currently offers 130 EV models

priced at [music] under $40,000. The

United States offers four. And the

safety question you might expect at that

price point, it's largely been settled.

Every major Chinese EV launched in

Europe, the BYD Seal, AT3, Dolphin,

Neo5, Zika 001, MG4 has scored five

stars on Euro Encap. The Neo E5 was the

first car ever to pass Euro Encap's

stricter 2023 protocol at five stars.

And fourth, brutal [music] domestic

competition. China's market is

unforgiving.

>> [music]

>> There's dozens of brands, including tech

companies like Xiaomi and Huawei, who

are competing for the same customers.

[music] That environment, which Chinese

industry insiders call Nuan, a

relentless [music] cycle of price wars,

over capacity, and forced innovation,

has produced companies that are

exceptionally good at doing more for

less. Xiaomi, the smartphone company,

launched its first car in April 2024.

Within 21 months, they delivered over

540,000

vehicles. Their first model, the SU7,

took 50,000 pre-orders in 27 minutes.

That kind of ramp is almost unimaginable

in any other market. The tariff wall the

United States has built isn't keeping

Chinese automakers from getting better.

It's keeping American consumers from

seeing it firsthand. But the rest of the

world is seeing it very clearly. In

Europe, Chinese cars captured 6.1% of

the market in 2025, up from near zero

just three years ago. In the UK, BYD

registered over 51,000 vehicles. In

Spain, BYD sales jumped from 3,800 in

2024 to nearly [music] 16,000 in 2025.

In Germany, BYD outsold Tesla in January

of 2026.

Mexico is now the largest single export

destination for Chinese vehicles.

Australia, the Philippines, Brazil, and

the Middle East are all posting strong

growth. Canada is preparing to allow

49,000 Chinese cars in at a 6.1% tariff

in early 2026, [music] surrounding the

United States with Chinese product. And

here's the most surreal part of the

whole story. Stalantis, the company that

makes Jeep, Ram, Dodge, and Chrysler,

paid€ 1.5 billion euros in 2023 for a

21% stake of a Chinese EV maker called

[music] Leap Motor. They now sell

Chinese-built EVs in nine European

countries through their own dealer

network, a Detroit equivalent automaker

openly admitting it couldn't beat the

Chinese. So, it joined them and the

strategy is evolving. Chinese automakers

learn from the tariff backlash. They're

no longer purely an export economy. BYD

is [music] building factories in

Hungary, Brazil, Turkey, and Thailand.

Cherry and SIC are setting up local

operations across Southeast Asia and

Latin America. The term industry

analysts now use is gloalization. Build

where you sell, hire local workers,

navigate local politics, and remove the

tariff risk entirely. That model, local

production, Chinese engineering is

exactly how Japanese automakers won

America in the 1980s. Toyota, Honda, and

Nissan didn't wait for the United States

to open the door. They built factories

in Ohio and Tennessee, hired American

workers, and became American companies

that happen to be designed in Japan. The

Chinese are running the same play just

40 years later. So, what has the United

States actually done about all of this?

The answer under both administrations

has been the same. Tariffs. [music] In

May of 2024, the Biden administration

quadrupled tariffs on Chinese EVs from

25% to 100%. [music] The Trump

administration kept every one of them in

place and added more. A ban on Chinese

software and connected vehicles and a

phase out of Chinese hardware by 2029.

On top of that, the $7,500 federal EV

tax credit, which had been helping

American consumers [music] afford

electric vehicles, expired on September

30th, 2025. The result is that the

economics of buying an EV in America in

2026 have [music] become hostile. At

least 20 EV models have been

discontinued or paused in the US market

in 2025 [music] and early 2026. The

Tesla Model S and Model X, Honda's

entire Zero series before it ever

launched, the Volvo EX30, the BMW i4 and

iix, the Audi Q8 [music] Ron, Cadillac

Celesteig capped at just 25 units a

year, and Ford's F-150 Lightning killed

in December of 2025. Sales of the Subaru

Sultterra fell 98.8%

in October of 2025. [music] The Toyota

BZ4X fell 95.6%.

Because selling them profitably under

the current tariff regime became [music]

impossible.

And the Volvo EX30 is the perfect case

study in the absurdity of layered

protectionism. It was originally built

in China, so it faced Biden's 100%

Chinese EV tariff. Volvo invested €200

million to move production to Belgium.

Then in March [music] of 2025, Trump's

blanket 25% tariff on imported vehicles

hit Belgium, too. A car that was

supposed to start under $35,000

now costs $40,345

in the United States. Volvo confirmed it

won't return to the American market

after the 2026 model year. Meanwhile, in

Europe, the same car was the third

bestselling EV of 2024, over 78,000

registrations, and it won EV of the

year. The rest of the world still gets

it. America doesn't. Now, the argument

for tariffs is a serious one. The US

auto industry supports 10 million jobs

and generates 730 billion in annual

wages. If Chinese EVs entered the

American market at $10,000 to $12,000,

the disruption to domestic manufacturing

would be immediate and severe. But there

is a counterargument that's equally

serious. Tariff walls don't breed

innovation. They reduce the pressure to

compete. Studies of previous US tariff

regimes have found net job losses of

140,000 to 275,000 across industries

paired with high consumer prices. And

Chinese automakers are getting better

whether or not they're in the US market.

The tariffs delay the confrontation.

They don't change the underlying

dynamics. It's all about collaboration.

It's the only way out of this. You can't

unless the big three are going to start

innovating in a huge way in the US,

which doesn't look likely. Maybe Ford

has got a bit of a better strategy.

They've got their new skunk works.

They've got new cars, electric cars in

uh in development. Unless they really

start working together more with the

Chinese, you're not going to be

successful. There's only one way out and

it has to you have to collaborate. Like

pushing and fighting back against it

just won't work. Tariffs don't work. You

know, blocking technology doesn't work.

It's just a stop gap. There's a

historical parallel worth sitting with.

When Japanese automakers enter [music]

the United States in the 1980s, critics

warned of a catastrophe for American

workers. [music] What actually happened?

Toyota and Honda bought manufacturing

techniques that ultimately made US

industry more competitive. Workers kept

their jobs. American companies built

better cars. [music]

Consumers got more choice at better

prices. But there's a crucial asymmetry

between then and now. Japan was welcomed

in if they bought jobs. They built 24

plants on US soil, invested 66.4 4

billion and today support 2.34 million

American jobs. China's being kept out

entirely. BYD sheld its Mexico factory

in July of 2025 under tariff

uncertainty. As of today, there's not a

single Chinese-owned auto plant in the

United States. The question for the

United States right now is whether

protectionism is buying time for

American automakers to catch up or

whether it's just buying time. Let's be

direct about what the current situation

means if you're buying a car in America

today. You're paying more than you need

to. The average new car in the United

States costs $51,456.

The average Chinese EV costs a fraction

of that. Those products do not exist in

your market by policy design. You're

being insulated from a competition that

in all likelihood would drive prices

down. And whilst that policy protects

American manufacturing jobs, which is a

legitimate goal, it also means the EV

transition in America is stalling. The

US EV market has been flat or shrinking

for over 20 consecutives months.

Meanwhile, China crossed the 50% EV

penetration threshold in mid 2024.

Australia, with roughly the same EV

starting point as the United States,

grew EV sales by 38% in the same period

the US flatlined. And here's the

practical consequence. The rest of the

world is accelerating into an electric

future with affordable options. American

consumers are navigating a shrinking

selection of increasingly expensive

vehicles, many of which are disappearing

from the market entirely as

manufacturers pull back. Ford CEO calls

Chinese competition an existential

threat. Ford killed the F-150 Lightning.

GM took a 5 billion write down on China

and dropped his Ultium brand. Stellantis

posted $26 billion loss in 2025, its

first annual loss in history. And there

are signs that even the industry knows

it. Ford's CEO, the man who builds

Mustangs and F-150s, is publicly asking

the United States to allow Chinese EV

technology into the country because he

believes competing against it rather

than hiding from it is the only path

forward. BYD has filed legal challenges

against the tariffs in the US Court of

International Trade. Canada has already

cracked the door open, allowing 49,000

Chinese EVs at a 6.1% tariff in early

2026. The wall is holding for now, but

the pressure building behind it is

considerable. The trajectory, if you

follow the data, is fairly clear.

Chinese automakers will keep getting

stronger in every market except the

United States. They'll build local

factories in Europe, Brazil, and

Southeast Asia. They'll negotiate tariff

exemptions, hire local workers, and

strip away the arguments against them

one by one. The 100% US tariff war will

remain politically popular. Defending

American auto workers is not a

controversial position, but its

effectiveness will erode [music] as

Chinese companies root production

through third countries and build out

North American supply chains. Speaking

at the Detroit Economic Club in January

2026, the president said, "Let China

come in. Let Japan come in. They are,

and they'll be building plants, but

they're using our labor. Goldman Sachs

predicts BYD's overseas sales will hit

1.5 million vehicles in 2026, exceeding

even BYD's own internal targets. The

global expansion will not slow down. For

US automakers, the path is clear, even

if it is uncomfortable. They need to

close the technology and cost gap, not

rely on the tariff wall indefinitely. GM

and Ford have both scaled back their

near-term EV targets. And that's a

strategic risk. And I've always said

like if you insist on buying a car from

your favorite company and you won't buy

electric, you're only going to buy gas,

you're kind of putting the nail in the

coffin because they the signal is keep

making gas cars.

>> And now

>> in 5 years it might not even be an

option. It'll be just be too late. There

will be millions of BYD cars or you know

>> that are available and your your

industry is just going to be toast

>> completely.

>> The companies that were slowest to

respond to the Japanese challenges

[music] in the 70s and 80s AMC Chrysler

the old GM paid the heaviest [music]

price. AMC was absorbed into Chrysler.

Chrysler took two federal bailouts. The

old GM went bankrupt. UAW membership

fell from 1.5 million in 1979 to under

380,000 [music]

today. That's a 77% drop. For US

consumers, the honest forecast is a

period of fewer choices and higher

prices in the short term with a

longerterm outcome that depends heavily

on whether American automakers use this

window to genuinely compete or simply

just wait. For Chinese automakers, the

picture is straightforward. They've

already won globally in ways that are

difficult to reverse. Whether they win

in America depends on geopolitics as

much as engineering. Is this a story

about China winning or America losing?

Well, neither. It's a story about what

happens when one country decides to go

allin on the technology that will define

the next 50 years of transportation and

gets a 10-year head start. The Chinese

auto industry didn't get here by

accident. [music]

It didn't get here by cheating. And it

didn't get here only because of

government subsidies. It got here

because of scale, speed, competition,

and a willingness to vertically

integrate and cut costs in ways that

Western companies [music] didn't move

fast enough to match. The United States

has real cards to play. Engineering

talent, capital markets, [music]

domestic demand, and an industrial base

that still produces some of the most

capable [music] vehicles in the world.

But playing those cards effectively

requires an honest accounting of where

the gap is and how fast it's growing.

Tariffs can buy time. They cannot on

their own close a technological [music]

lead. And the companies that build the

best, most affordable electric vehicles

will eventually find their way into

every market that wants them, including

this one. The question is whether

American automakers use the time they've

bought to genuinely compete. Thank you

so much, Elliot, for putting this

together. I think we all need to stop

pretending tariffs are a strategy.

They're a stall. If you want more

analysis like this, hit that subscribe

button and let us know in the comments

below, what do you think? How impactful

is the future where EVs are made largely

by China is going to impact the rest of

us all? Sound off in the comments below.

And if you want to see more awesome

content from Chinese stories, let us

know because Elliot is going to work

with us on a couple of episodes here and

there and he's there on the ground to

cover them. All right, I'm Ricky Ta

Vinci. Thank you so much for watching.