Assessing the Rise of Chinese EV Manufacturers

In this episode of Motley Fool Money, Motley Fool contributors Tyler Crowe, Lou Whiteman, and Jason Hall discuss:

• The rapid growth of Chinese electric vehicles.
• The increasing competitive landscape and how it impacts the investability of the sector.
• Whether the rise of Chinese EVs changes the investment thesis in American automakers.
• Our most attractive stocks in the automotive industry today.

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A full transcript is below.

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This podcast was recorded on April 14, 2026.

Tyler Crowe: We're deep diving into automotives and the Chinese EV market. This is Motley Fool Money. Welcome to Motley Fool Money with the Hidden Gems team. I'm Tyler Crowe. Today, I'm joined by longtime Fool contributors, Lou Whiteman and Jason Hall, who's pulling in some spot duty for us. This is a wonky week for us. Several of us are going to be attending a special Motley Fool member event and involves some travel. We're into a special deep dive into the Chinese electric vehicle market. We got a listener question related to this, and we thought it would be a great time to dive into this.

Our question came in from Frederick May. The question is, I hope you're all doing well. I'm really intrigued by the developments we're seeing in the Chinese electric vehicle sector lately. Now, I would love to hear your thoughts on a few things in the next podcasts. I'm curious about your perspectives on Chinese EVs with pricing pressure on China, Europe still having tariffs on Chinese EVs, etc. Chinese EV companies have become a real boogie man for the industry. The U.S. and Europe have put up barriers for Chinese auto manufacturers in the form of tariffs, outright bans, both BYD and Geely have overtaken Tesla in terms of global EV sales. Well, companies like SAIC, Changan, and Cherry, are all vaulted in the top 10, and are really growing quite fast. I want to start with this question for both of you guys. What's in the sauce? Chinese EV companies where they're having so much success. I mean, the easy answer is Chinese customers buying Chinese goods. But something's happening here where countries around the world are putting up trade barriers when it comes to Chinese made EVs. Lou, what are you seeing here?

Lou Whiteman: Yes, there's trade barriers, but I think it's important to look at the direction of travel here because we are moving towards more acceptance of the Chinese companies. The trends are for Europe, Canada, other parts of the world, to be more receptive to these EVs. Canada just switched from 100% tariff to 6.1%. They did keep a cap in place on imports, so it's not a free market, but even if the cap remains in place, it's supposed to raise over time. That is a thawing. That is an opening of the market. In Europe, you have a similar story. They are moving away from tariffs and towards price minimums. Just make sure you don't undercut our industry, and if you can do that, sell as many as you want. It's hard to predict a future, guys, but the more of these vehicles that are on the road in these regions, the more consumers in these regions will get to know them. If the quality holds up, there will be a lot of pressure on governments to open up the market more. We've seen this before, and I think, look, there's a lot of geopolitics maybe assisting in this, but I do think the trend is in the right direction for Chinese automakers, and I don't think that's going to reverse anytime soon.

Jason Hall: Lou, I don't think you're old enough to really remember when Japanese cars hit U.S. markets. We were all kids. Tyler didn't exist back then. The idea of Tyler may have existed, but we saw this happen. When Japanese cars hit US markets, they were panned as small, cheap, unreliable. But it turns out they were exactly the disruption that Western automakers needed to get their act together because they were making big, unreliable garbage cars. The result was consumers absolutely won. We've seen Korean automakers over the past 15 years, 20 years really do some of the same thing and disrupt. Cars are far more reliable. They're more fuel efficient, they're safer, just plain better than ever. I think that really started with Japan entering Western markets with cars. I think China is going to do the same thing with the EV market.

Frankly, Western countries have been extremely protectionist of their domestic auto markets, while at the same time trying to have their cake and eat it, too, while trying to take share in the explosive growth of the Chinese market. Now, there is a legitimate argument that modern cars with all the connected technology could present a security risk. That's one of the things that's been used as the reason for a lot of these trade walls that have been put in place. But, look, that's largely just been cover to lock Chinese automakers out of the West and to prop up domestic automakers.

I firmly believe that what Lou says right is these Chinese EVs get access to big Western markets, it's going to disrupt things in ways that are positive for consumers in the long run. In part because of something that Japan had 40 years ago, South Korea had 20 years ago, it's labor arbitrage, plus the government playing a bigger role in the industry. These Chinese companies also have something that Japan and South Korea never did massive natural resources and the world's biggest steel and electronics components manufacturing infrastructure, that's where the real silver bullet is for China when it comes to EVs.

Tyler Crowe: Yeah, it almost seems like there was a little bit of writing on the wall with Chinese EV manufacturing where supply chains were keeping push components and, parts of automotives and doing like to the point starting making assemblies. It was almost like a matter of time before it's like, Hey if we take these five assembly pieces and put them together, all of a sudden we got a vehicle, and now we're cooking here.

There was a little bit of that sort of involvement, but I do want to two anecdotes, I think is a good example of this story that we're talking about. You said I'm too young to remember Japanese markets cars taking the market. But I do remember that I think it was an early or mid '80s automotive magazine where they lined up a Buick, an Oldsmobile, a Pontiac, and a Chevrolet right next to each other. Were the exact same color. They were exact same body build, make. They looked exactly the same. it was like an indictment of the American auto industry getting very complacent with what they were doing and being like, Look, you almost deserve to get your hat handed to you because this is what you're putting out. One might argue a little bit of that is happening today.

The other anecdote, and this is a little bit behind the curtain here. I live overseas, a little bit of personal disclosure here, and I do live in a country where Chinese EVs are popping up everywhere. This was a place that we would see a lot of imported cars from Japan, United States, that were probably used cars or something like that, and a lot of that is getting displaced by Chinese electric vehicles. Almost all of the taxis these days are being quickly moved over to BYDs or something like that in the electric vehicle space. It is interesting to see it on an anecdotal basis really happening. After the break, we're going to go from the business of making Chinese EVs to the actual investability of the Chinese EV market.

There's a little bit of irony in the emergence of new EV companies, both in China and to a lesser degree, United States. It seems like the legacy automotive industry spent the prior couple of decades on this massive consolidation streak. We saw mergers or the hollowing out or discontinuation of various brands that people knew for decades and similar moves because there was this acknowledgment that the industry was probably too fragmented for anyone to really make any money and fast forward to they thought they were in a good place, and now all of a sudden we have all these new EV companies popping up and making their mark to varying degrees of success.

Also, financially, it's starting to get a little strenuous, as well. Even this most recent quarter, BYD announced that it has saw a 19% decline in profits, in part because other EV companies are clawing to take share. BYD in 2025 was the largest producer in China. In the first quarter of 2026, it's the fourth largest. It's really changing quite fast. This leads to a little bit of a question. You know, setting aside any thoughts on whether you can buy stocks on the Chinese mainland versus Hong Kong and some of the challenges that come with trying to acquire Chinese stocks, do you see Chinese EV companies as good investments right now? Because I see a fiercely competitive industry that's going to price itself out of profits for probably several years.

Lou Whiteman: Let's back up because let's talk about autos before we get into the Chinese specifically, because I think it matters. Auto, as you say, is a brutal industry, perhaps the most brutal industry. In my past life, I had experience with automotive restructuring about 15 years ago. The rule of thumb back then was $10 billion in the bank was break-even just because of the complexity of the accounts receivable down the supply chain. It's a nasty, hard business. I think that explains that first wave of consolidation over the last hundred years. Scale matters.

EVs are different. The supply chains are a little different, but I think that all of this suggests that there will be consolidations. These standalones will end up as part of some new General Motors, if not the existing General Motors. The difference this time is it won't necessarily be Detroit leading the way. Detroit led the way in the last century because we had the biggest, most dominant companies that were doing the best in extending their reach across the globe. Arguably, China this time, because of the trends we mentioned earlier, has a big say in this, if nothing else. I do think it's probably safe to invest in Chinese market leaders. BYD, I think is a good one. Geely, you mentioned them at the top. They own a ton of Western brands. They own Volvo. They own Aston Martin. They own Polstar. That's a huge, huge leg up already in this consolidation process and getting your brands across the world. The challenges are real. I see better opportunities out there, be it Chinese or US automakers, so a very lukewarm endorsement. But, yeah, I do think that there are Chinese companies that will be among the winners.

Jason Hall: Yeah, for the most part, directionally for certain, I agree with Lou. I think Chinese EVs are going to take share and challenge Western automakers, force them to innovate and improve. But I'm just less concerned that investors in those Chinese EV companies are going to be big winners Look, their CCP doesn't really care about the share price being a big winner. It cares about building a durable industry that will employ large numbers of Chinese and generate lots of revenue that it can take its share of. We should be honest to Lou, you hinted at it, but I want to be very clear about it. Automaker stocks that beat the market writ large, there rarities to the point of possibly being extinct. Instead of looking for the next Tesla, we should either be looking for pockets where there's predictable profitability, and we'll talk about that next or disruption that's happening somewhere else.

Tyler Crowe: Jason stole my line here, and coming up for after the break, we are going to take a broader look at not just Chinese EV companies, but the automotive market writ large and look for opportunities.

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Tyler Crowe: I think another ironic twist in the EV story is just how a few months ago, we started to see big automotive makers in the United States pull back from EV manufacturing and took some considerable write-downs as they try to reshuffle or redo their portfolios. Some of them are saying, Hey, we just needed to redo it and require write-downs as a result. But that probably meant there was a little bit of a misstep here. Now, I'm not going to say this was the sole reason. But the decisions did line up quite nicely with the end of the EV tax credit in the United States, which I think ended, I believe in October of last year. Just a little bit of timing seems very serendipitous here.

At the same time we're recording this, the Financial Times put out a story on the surge of used EVs in the United States, as the price of gasoline or petrol, if I'm being specific to the Financial Times here. because people are opting for EVs again because of high prices. Now, I don't think I'm being controversial here when I say that a lot of automotive companies have shot themselves in the foot a few times, and I feel like this EV reversal at a time when everyone wants EVs again is just another example of that.

Lou Whiteman: I'm going to hold my nose and defend Detroit h