Ever wonder why Western governments are concerned about their domestic auto manufacturers?

By Gary S. Vasilash

The U.S. is applying big tariffs on electric vehicles from China (as in 100%), and the European Union, moderately big (38%). (Apparently the Chinese are doing a bit of retaliation, as it has opened an investigation into pork products exported from the EU.)

Some numbers from GlobalData provide a sense of the sort of numbers associated with Chinese vehicle manufacture that are concerning to those in the U.S. and Europe.

Looking at sales of passenger vehicles in China from January to through April, there was an increase of 5.5% year-over-year to 6.3 million units.

But the red flag is this number: a rise in production by 9%, or 7.6 million units.

Simply: 1.3 million more passenger vehicles made than sold.

This means overcapacity. Which also means that companies are probably interested in finding markets where they can offload those excess vehicles.

And while the 7.6 million number  is all passenger vehicles, not just those with batteries in addition to the 12-V battery under the hood, in April there were 424,0000 vehicles exported from China, a year-over-year increase of 36.9%.

And those joint ventures. . .

Once, Western brands were almost giddy when it came to the opportunity to create joint ventures in China with Chinese companies. The market size was (and is) nothing short of amazing.

GlobalData finds that when it comes to NEVs—or “New Energy Vehicles,” which are the hybrids and full EVs—the penetration rate of Chinese local brands was close to 60% of the market, up 7% from the same period last year, while the joint venture brands have a penetration rate of 12%–still up from last year’s number. But only 1%.

So one can expect the Chinese OEMs that produce NEVs to up the production of those vehicles, which will undoubtedly lead to overcapacity there, too, which means they’ll have to do something to do with those vehicles.

And that something is probably exports.