Beginning January 1, 2024, China will tighten restrictions on exporting electric vehicles (EVs). Automakers will need to apply for specialized export permits to meet the terms of these new Order requirements. This decision, announced by the Ministry of Commerce, aims to “promote the healthy development of the new energy vehicle trade” and addresses concerns over oversupply and intense price competition among domestic manufacturers.
Now, China has overtaken Japan to become the world’s largest car exporter. Just as this remarkable success unfolds, the new export licensing requirement takes effect — last year, it sold around 5.5 million vehicles abroad. And, perhaps most surprisingly, almost 40% of the vehicles exported were electric. This further underlines the emerging prominence of the EV sector in China’s automotive scene.
By the first half of 2025, China’s domestic EV market had reached record sales highs. During this same period, electric vehicles accounted for over 50% of all passenger vehicle sales. This incredible jump in sales shows just how much domestic demand is surging for EVs and how competitive this market is becoming. With such dramatic growth has come fears of an imminent oversupply and ensuing price wars between manufacturers.
That said, the Chinese government is responding – at least in part due to increasing external pressure. Tariffs on EVs produced in China have already been implemented by both the United States and EU member states. These tariffs were never really about protecting American industry against bad behavior. Specifically, officials argue that government subsidies for Chinese EV manufacturers provide those companies with an unfair advantage in international markets.
Beijing’s latest measures appear to be a strategic move to manage the burgeoning electric vehicle sector within the world’s largest auto market. As recently as this month, industry leaders lamented the direction the market is headed. Great Wall Motors chairman Wei Jianjun’s frank assessment was no different, as he cautioned that if the current trajectory continued, major calamity lies in wait for the industry.
Unsurprisingly, this year, the competitive landscape was even more fierce. BYD was recently the target of concern when it announced its latest price cut spree. Following BYD’s lead, several other competitors reduced prices, exacerbating fears of a debilitating price war that could undermine profit margins across the sector.
In light of these changes, BYD, Great Wall Motors, and other new passenger EV automakers must obtain export permits. This requirement serves as both a protective market stabilizing measure while encouraging sustainable growth in China’s growing EV exports. The federal government’s priorities seem to be contained to juggling the domestic market landscape. It is demonstrating its commitment to advancing more equitable development in this critical industry by prioritizing international trade relations.
