Chinese automakers have spread fear among automakers around the world.
Tesla was recently overtaken by China's BYD – backed by Warren Buffett's Berkshire Hathaway – in global electric vehicle sales.
Some of the nicest electric vehicles made in China are attracting interest from wealthy car buyers in other countries, including smaller countries where the vehicles are not yet officially sold. This has opened the door to individual traders who can act more nimbly than the automakers themselves, taking advantage of a loophole.
As Rest of the world reports, these traders register their vehicles in China before sending them to eager fans overseas, in countries like Kazakhstan and Saudi Arabia. In this way, the vehicles are technically used vehicles, in which case no authorization from the car manufacturer is required.
Through this means, foreign buyers acquire fashionable Chinese electric vehicles that are often considered status symbols, including high-end models from BYD, Li Autoand Zeekr (Geely's premium electric vehicle brand). Of course, they pay extra to do so and might encounter repair difficulties when the automakers themselves have not yet established a local presence.
“Chinese cars are becoming really popular,” said a car exporter from northern China's Hebei province. Rest of the world. “Large screens, interactive features, hidden door handles, voice control, massage chairs: these can all be very attractive. »
Certainly, it is the desire for the most attractive Chinese models, and not ultra-affordable models, that this gray market responds to. And of course, the gray market will become of no use over time as Chinese automakers expand into more and more countries.
But the desire and awareness of such models among buyers in far-flung countries speaks to the ability of Chinese automakers to compete at both the high and low end of the market.
Last summer, Ford engine Executive Chairman Bill Ford Jr. has warned that U.S. automakers are “not yet ready” to compete with Chinese rivals in electric vehicles. “They grew very quickly, they grew them on a large scale and now they are exporting,” he said. said CNN. “They’re not here, but we think they will come here at some point and we have to be ready.”
This story was originally featured on Fortune.com