Apr 13, 2026
China has long been considered not only an ever-more-efficient manufacturing force to be reckoned with, but the "world's factory" (1), responsible for upwards of 30% (2) of total industrial production — and, its mastery of certain sectors, like automotive, is a growing cause for concern among stakeholders.
A whopping 70% (3) of all new electric vehicles (EVs) now hail from China, with Shenzhen-headquartered brand BYD (OTC:BYDDF) far outpacing (4) Tesla (NASDAQ:TSLA) and others in sales, and scaling worldwide operations as a result (5). It has automakers like Toyota (NYSE:TM), Honda (NYSC:HMC) and Ford (NYSE:F) panicking about projects (6) and overhauling strategy (7), with Ford executives saying even three years ago that China was way ahead of the game (8).
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And, a recent tour of one of the Asian powerhouse's vehicle plants has proved this beyond a shadow of a doubt, at least to Honda President and CEO Toshihiro Mibe.
"We have no chance against this," Mibe said (9) upon a visit to a Shanghai parts factory, commenting on its seamless automation across all levels of production. Logistics, procurement and all aspects of the process were so automated, in fact, that he did not spot a single human worker on the supplier's floor.
The Chinese edge
Ford (10) and Toyota (11) leaders have expressed similar sentiments regarding Chinese makers' sheer speed in not just building cars, but designing them. The nation is known for its expedient development of all sorts of products (12), and its ability to bring vehicles from concept to market in half the time of competitors (13) is one of the more unignorable examples of this.
China's cheap labour costs, lack of red tape, well-harmonized supply chain, tax rebates and more (1) have also helped to create an unmatchable cost-competitive edge that other industry players are understandably spooked about (11). And, investors with money on the line have a right to be apprehensive, too.
Honda's sales within China — a country that was once a boon for the maker — have plummeted from some 1.6 million new cars in 2020 to just 640,000 in 2025 (14), with the brand expected to produce even less than 600,000 vehicles this year at its Chinese facilities, which are only operating at 50% capacity (15) due to waning interest. Toyota has also just reported year-over-year sales declines (16) within the country in March as homegrown BYD's lead in the EV sector continues to grow (17).
Canadian Prime Minister Mark Carney's move to drastically slash tariffs on Chinese EVs (18) in January have also made companies like BYD more of a threat closer to home.
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Potential portfolio implications
Automotive stocks are a common part of many broad-based mutual funds and ETFs (19) — historically even a cornerstone for some (20) — with Tesla perennially serving as one of the more contentious picks.
This week, some experts doubled down on Tesla stock as prices slid, while others warned of a crash. The Musk-helmed company, Ford and Toyota remain among the best-known investment options (21) in the sector. But, big shifts in focus under the threat of Chinese manufacturing, along with disappointing sales numbers, could understandably make investment feel risky.
Honda recently reanimated its shuttered R&D arm (22) in hopes to spur more innovation, with Mibe telling journalists in March that the company needs to focus on digitization, and quickly (23). At the same time, executives announced huge "losses associated with the reassessment of its automobile electrification strategy" (24) at the end of March following the cancellation of a number of Honda's EV projects, including the 0 SUV, 0 Sedan, and Afeela models.
Toyota's CEO has likewise said regarding not just his company, but the industry in general, "unless things change, we will not survive" (25), calling for some major productivity pivots to match Chinese manufacturers. Meanwhile, homegrown EV competitors like Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID) (26) are showing promise (27) in the face of deterioration elsewhere in the sector.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Investopedia (1),(19); The Economist (2); International Energy Agency (3); Autovista24 (4); Financial Post (5); Motor1 (6),(15); Dealership Guy (7); Reuters (8),(13); Nikkei Asia (9); CarBuzz (10),(11),(23); LinkedIn (12); AutoGuide (14); Asian News Network (16); Statista (17); Government of Canada (18); ETF Database (20); Motley Fool (21); MSN (22); Honda (24); Yahoo Finance (25); The Globe and Mail (26),(27)
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Becky Robertson is a senior staff reporter with Moneywise and a lifelong writer. Along with years in the journalism industry at outlets such as blogTO and Quill & Quire, she's participated in writing residencies at the Banff Centre for Arts & Creativity and Writing Workshops Paris. With 33 countries visited and counting, she finds travel to be one of her greatest inspirations.
