China's Record Orders for Car-Carrying Vessels Reflect Booming EV Export Market

China’s booming EV Exports: Chinese automakers and shippers are making history with a surge in orders for car-carrying vessels, driven by the booming export market for electric vehicles (EVs). According to data from shipping consultancy Veson Nautical, China is poised to elevate its fleet to the world's fourth-largest by 2028, with a record number of orders in progress.

Presently, China ranks eighth globally in terms of its fleet size, with 33 car-carrying ships. However, with 47 ships on order, comprising a quarter of global orders, the nation is set to make significant strides in the maritime domain. Key buyers include prominent automakers like SAIC Motor, Chery Automobile, and EV giant BYD, alongside major shippers such as COSCO and China Merchants.

Surge in Order

The surge in orders has largely benefited Chinese shipyards, which have secured 82 per cent of global orders, marking a remarkable feat in the industry. Analysts predict the emergence of new trade routes tailored exclusively for Chinese automakers, highlighting the nation's robust expansion in the global automotive market.

Driven by fierce competition, cost-conscious consumers, and economic dynamics, automakers are increasingly venturing into international markets where their products command higher prices. China, surpassing Japan as the largest auto exporter last year, is spearheading this global automotive revolution. Notably, BYD alone exported over 240,000 cars in 2023, constituting 8 per cent of its global sales volume, with plans to ramp up exports to 400,000 units this year.

Foreign players like Tesla and Volkswagen are also capitalising on China's cost-effective supply chain by expanding their production capacities for exports.

Despite the burgeoning demand, rising shipping costs and international concerns over excess industrial capacity have sparked debate. Both the U.S. and EU have raised alarms about China potentially flooding their markets with low-priced products. In response, Chinese authorities have defended their industrial policies, emphasizing innovation and downplaying the role of state support in driving growth.

While concerns over excess capacity persist, particularly in shipbuilding, experts note potential opportunities in niche markets such as car cargo ships. The issue of overcapacity was also a topic of discussion during U.S. Treasury Secretary Janet Yellen's recent visit to China, underscoring its significance in the global economic landscape.

As China's Minister of Commerce Wang Wentao engages in talks in Europe, discussions surrounding the fairness of subsidies for Chinese-made EVs are likely to intensify, further shaping the future of the global automotive industry.

With Reuters Inputs