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How China Became the World’s Largest Car Exporter

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How China Became the World’s Largest Car Exporter

Source: Alix Partners

Note: 2024 values are estimated.

Just two decades ago, China had little capacity to make cars, and owning one was considered novel. Today, China produces and exports more cars than any other country in the world.

President-elect Donald J. Trump has promised to impose new tariffs on China. Many countries, including the United States, already levy extra tariffs on China’s electric vehicles. But with all of the advantages China wields in automaking, this pushback is unlikely to undercut China’s dominance.

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China’s home market for car sales is the world’s largest — almost as big as the American and European markets combined.

As China’s domestic market grew, so did its production capacity, propelled by massive government investment and world-beating advances in automation. Yet in recent years, the pace of sales has fallen behind as consumer spending slows in China’s economic downturn. The result is that China today has the capacity to make nearly twice as many cars as its consumers need.

Source: GlobalData

Note: 2024 values are estimated.

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To deal with the excess, China has increasingly looked overseas to sell cars.

China is a leader in the transition to electric vehicles and it exports more of them than any other country. Chinese brands like BYD are becoming known worldwide for offering advanced electric cars at the most competitive prices. And as Chinese drivers have shifted rapidly to electric vehicles, demand for gasoline-powered cars in China has plunged and many are being exported instead.

But China’s trading partners say that China’s exports of both electric and gasoline-powered cars imperil millions of jobs and threaten major companies. Earlier this year, the United States and the European Union put significant new tariffs on electric cars from China. Governments are concerned because the auto industry plays a big role in national security, producing tanks, armored personnel carriers, freight trucks and other vehicles.

What’s more, China has used steep tariffs and other taxes as a barrier to car imports, so that practically all of the cars sold in China are made in China.

Here’s how China took the lead in the global car market.

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Decades of investment in electric cars pays off

Last year, China sold 1.7 million electric cars abroad, nearly 50 percent more than the next largest exporter, Germany. Since 2020, shipments have skyrocketed.

The top destination is Europe, where consumers prefer small, compact models like those sold in China.

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Southeast Asia is another big market, where buyers increasingly prefer Chinese cars for their cheaper prices.

China also exports a small but fast-growing number of plug-in hybrid cars. Hybrids are particularly popular among buyers who may not have access to extensive charging networks but still want electric cars for short trips.

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China has invested heavily for more than 15 years in developing electric cars, to limit its dependence on imported oil. Wen Jiabao, China’s premier from 2003 to 2013, made electric cars one of his highest priorities. In 2007, he reached outside the Communist Party to choose Wan Gang, a Shanghai-born former Audi engineer in Germany, as the country’s minister of science and technology. Mr. Wen gave him essentially a blank check to make China the world’s leader in electric cars.

Now, half of China’s car buyers choose battery electric or plug-in hybrid cars. Until recently, buyers of electric cars also received large subsidies from the government. Carmakers have received low-interest-rate loans from state-controlled banks to build dozens of factories, as well as government tax breaks and cheap land and electricity. By one estimate, Beijing’s assistance to China’s electric car and battery sectors has been worth more than $230 billion since 2009 — one reason that the European Union has imposed anti-subsidy tariffs.

China is projected to continue its heavy investment and retain its lead in electric vehicles.

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Unloading excess gasoline cars at steep discounts

Because of the shift to electric cars in China, carmakers have been left to slash prices on unwanted gasoline cars and unload them overseas. Last year, most of the cars China sold abroad were traditional gasoline engine cars.

Russia was the leading destination last year. Sales surged after the Ukraine invasion, partly because of the departure of Western brands from the Russian market.

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China’s gasoline cars were also favored by middle- and lower-income countries in Latin America and the Middle East for being cost-effective.

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China has more than 100 factories with a combined capacity to build close to 40 million internal combustion engine cars a year. That is more than twice as many as people in China want to buy, and sales of these cars are dropping fast as electric vehicles become more popular.

As a result, some assembly plants have been mothballed or shuttered. But automakers, reluctant to close facilities, are selling many gasoline-burning cars overseas at steep discounts.

Will tariffs be able to slow China down?

The flood of Chinese cars into the global market has raised alarms around the world. In addition to the European Union, governments elsewhere have levied extra tariffs on electric cars from China, on top of baseline taxes already applied to all imported vehicles.

Additional tariffs levied on Chinese electric cars in major world markets

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Note: Chart does not show baseline taxes or favored rates dependent on manufacturer or other compliance. India and Brazil levy tariffs on imported electric cars from all countries. Turkey levies the same tariff on all cars from China.

The countries’ tariffs come in different forms. The U.S. government levied a flat tax. The European Union calculated a rate for each automaker based on the estimated subsidies the company has received from Chinese government agencies and state-controlled banks. India and Brazil are also aiming to protect their local industries.

But tariffs may not fully offset Chinese carmakers’ competitive lead. Chinese companies offer cars with similar quality to their global rivals and at lower cost. Analysts at the bank UBS calculate that cars made by BYD cost 30 percent less to assemble than similar cars made by Western companies. Some of the biggest savings for Chinese companies are on batteries. China controls practically the entire supply chain for making electric car batteries.

Production costs are much lower in China

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Source: UBS

Note: Models compared are of similar size and function. Prices are in U.S. dollars, for models from 2021.

With the advantages China wields in automaking, even the world’s intensifying pushback is unlikely to stop the country from dominating the industry for many years to come.

BYD electric cars stacked for loading onto a ship for export at Taicang Port in Suzhou.

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Agence France-Presse — Getty Images

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Amazon MGM Studios’ ‘Project Hail Mary’ rockets to the top of the box office

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Amazon MGM Studios’ ‘Project Hail Mary’ rockets to the top of the box office

The Ryan Gosling-led “Project Hail Mary” rocketed to the top of the box office this weekend, marking a big win for Amazon MGM Studios.

The film — which stars Gosling as a science teacher who embarks on a space mission to save humanity — hauled in $80.5 million in the U.S. and Canada, making it the biggest domestic debut of the year so far. Globally, “Project Hail Mary” brought in $140.9 million.

The movie is an adaptation of a novel by Andy Weir, author of “The Martian” — another successful book-to-screen adventure. The big opening weekend for “Project Hail Mary” is a boost for Amazon MGM Studios, which had heavily promoted the film as an example of the big blockbusters it could produce.

“We believe deeply in the Hail Mary, and it’s clear audiences do as well,” Kevin Wilson, head of domestic theatrical distribution for Amazon MGM Studios, said in a statement. “What we’re seeing in theaters —the energy, the exit scores, the word of mouth — is everything we believed this film would deliver.”

Walt Disney Co. and Pixar’s “Hoppers” came in second at the box office this weekend with a domestic total of $18 million. The original animated film has now garnered $120.4 million in the U.S. and Canada since it debuted in theaters earlier this month.

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Indian action film “Dhurandhar The Revenge” came in third with $10 million, followed by Disney-owned Searchlight Pictures’ horror film “Ready or Not 2: Here I Come” and Universal Pictures’ romance “Reminders of Him” rounding out the top five.

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Testing for toxins in smoke-damaged homes could be mandatory. What to know

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Testing for toxins in smoke-damaged homes could be mandatory. What to know

When the January 2025 firestorms swept through Altadena and Pacific Palisades they not only burned down homes but left thousands still standing riddled with smoke damage.

The disaster set the stage for lawsuits by fire victims who alleged their homes were filled with toxic contaminants, yet insurers refused to do hygienic testing and properly clean and make them habitable again.

This week, a much-anticipated bill was unveiled in the Legislature that would establish first-in-the-nation limits for smoke-damage contaminants, require testing and force insurers to restore homes to their prior condition.

The proposed law specifically applies to homes damaged in urban or “wildland-urban interface” fires — such as those in January 2025 — where burning structures, cars, utilities and other items generate more toxins than a rural wildfire.

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Authored by Assemblymember Mike Gipson (D-Carson) and sponsored by Insurance Commissioner Ricardo Lara, Assembly Bill 1795 follows similar legislation introduced by Assemblymember John Harabedian (D-Pasadena).

That bill would apply to homes, schools and workplaces — and their properties — requiring insurers to meet existing health standards for lead and asbestos cleanup, while having the state develop additional ones for other contaminants.

Lara’s bill also follows a report issued last week by a smoke-damage task force he established last year, which established the framework for the bill. However, consumer advocates said it was stacked with members tied to the insurance industry.

Lara, who has been asked to step down by critics over his handling of insurers’ claims practices, has defended the task force and his handling of the wildfires, noting his department is investigating insurers.

Here’s what to know about the legislation, which still must go through legislative hearings before an Assembly vote.

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Why is this bill a big deal?

Under the current system, insurers are not required to pay for expensive hygienic testing for toxins in smoke-damaged homes. That has been a big source of friction with fire victims, fueling the ongoing litigation over the matter.

Under the bill, however, insurers would be required to cover testing for lead, asbestos and other contaminants that have been found in soot, char and ash inside homes after a wildfire. Such testing would be required both before and after any cleanup work has begun to ensure the home is left in “preloss” condition. Additionally, it sets timelines for claims payments and prohibits insurers from halting payments for temporary housing until a home is cleared as safe, if a state of emergency has been declared.

Who will determine what levels of various contaminants are safe?

The bill requires the California Environmental Protection Agency to develop minimum sampling, testing and chemical screening levels by June 30, 2027. The requirements would be most rigorous in a “high-impact” zone within six miles of a fire perimeter, with potentially lesser requirements for residences as they get further away. The zones and testing requirements could be adjusted for specific fires.

The agency also is required to establish training standards and certification requirements for inspectors and others involved in the testing and restoration of properties.

How does this help the January 2025 fire victims?

More than 40,000 insurance claims have been filed as a result of the Eaton and Palisades fires, with more than 13,000 for smoke damage.

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The bill allows the EPA, state and local agencies to establish expedited “interim” standards. Insurance department spokesman Michael Soller said this provision was written with the January 2025 fires in mind.

What do consumer advocates say?

They generally support the proposed changes. Amy Bach, executive director for United Policyholders in San Francisco, who sat on the smoke task force and was critical of its makeup, said she was pleased that the bill “acknowledges the perspectives of the homeowners and will advance their interests in an important way.” But she expects insurers will complain it’s too costly and threaten to leave the state if the bill is not toned down.

Attorney Dylan Schaffer, who has sued the California Fair Plan, the state’s insurer of last resort, over its smoke-damage practices, said the bill was a “very strong nod in the right direction” though it will be the final standards established by the state for testing and cleanup that will be most important. “It always gets down to the details,” he said.

What is the industry’s reaction?

The insurance industry is expected to lobby for changes to the bill, suggesting it could impose burdensome costs on companies.

Karen Collins, a vice president of the American Property Casualty Insurance Assn., said that “insurers support science‑based approaches to evaluating smoke damage and guiding appropriate remediation” but want to “help ensure the bill strikes a reasonable balance — protecting consumers while preserving insurance affordability, availability, and market stability.”

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Rex Frazier, president of the Personal Insurance Federation of California, an industry group representing state property and casualty insurers, also said the bill lacks analysis of the “tradeoffs” between the higher claims payments that will result from it and and its effect on consumer premiums.

He also was concerned that the bill appears to bypass traditional rule-making procedures and allow the state EPA to establish the toxic contaminant and other standards without public hearings.

Soller said the intent of the bill is to allow the agency to forgo hearings only in developing interim standards.

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San Diego County agency selling water to keep its high rates in check

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San Diego County agency selling water to keep its high rates in check

San Diego County’s water agency is selling some of its water to another Southern California agency to help limit increasingly high water costs for 3.3 million people.

The water is going to Western Municipal Water District, which serves a growing area of nearly 1 million people in Riverside County, including Corona, Riverside and Temecula.

The San Diego County Water Authority will transfer at least 10,000 acre-feet of water per year over the next 21 years, enough for about 30,000 typical households.

The agencies said the deal will be worth about $100 million over the first five years.

The San Diego County agency has invested heavily to get more water in recent decades. In 2003, it struck an agriculture-to-urban transfer deal and it also buys water from the Carlsbad desalination plant under a 30-year agreement. These actions have brought San Diego County plentiful water — also some of the most expensive in the state. At the same time, conservation efforts in San Diego County have reduced water needs.

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The San Diego County Water Authority delivers water to 22 cities and other agencies. Last year its board approved raising wholesale water rates 8.3%, which drew criticism from residents who said they were already struggling to afford their water bills.

Board Chair Nick Serrano said the deal “allows us to maximize the value of the investments San Diego County residents made over decades, strengthen water reliability, and do so in a way that is mindful of affordability.”

The two agencies said in a joint statement on Thursday that for Western Municipal, the additional water will help during drought and ensure reliable water without the cost and time involved in developing new water infrastructure projects.

The water will move from one area to the other through the pipelines of the Metropolitan Water District of Southern California, the regional wholesaler that imports water from the Colorado River and Northern California. Both San Diego County and Western Municipal are members of the MWD.

An agreement between the MWD and the San Diego County Water Authority last year ended a 15-year legal battle over water costs and cleared the way for San Diego County to start selling some of its excess water to areas that need it.

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