The strategic contraction of U.S. auto companies in the field of electric vehicles is making the outside world increasingly worried that the U.S. auto industry is facing an existential crisis, while Chinese auto companies are making rapid progress in this technology field that is widely believed to define the next era of automobiles. The latest warning signal appeared on Friday: Strantis Group disclosed that due to the impact of large-scale business restructuring, including the contraction of its electric vehicle business, the company had set aside US$26 billion in impairment losses, and its stock price plummeted by more than 20%. The group's chief executive, Antonio Filosa, blamed the loss on overestimating the speed of the energy transition.
On July 5, 2023, in Changchun City, Jilin Province, China, new energy vehicle bodies flowed in an orderly manner on the production line in the workshop of China FAW Group's Hongqi Prosperity Factory.
Prior to this, many U.S. car companies had significantly reduced their pure electric vehicle business and instead focused on large-displacement fuel pickup trucks such as the Ford F-150 and sports utility vehicles such as the Chevrolet Suburban. Chinese car companies have adopted the opposite strategy, focusing on electric vehicles and accelerating their global market deployment.
General Motors Co., Ford Motor Co. and other traditional automakers have lost billions of dollars in electric vehicle business, shrinking their strategies in part because of the elimination of federal tax credits and sluggish consumer demand for electric vehicles.
Even Tesla, which pioneered the electric vehicle industry, is now facing a lot of pressure. This year, under the leadership of Elon Musk, Tesla's appeal and market share in the European market have both declined. Its electric vehicle sales have been overtaken by the Chinese car company BYD; while BYD continues to expand exports in Europe and around the world. Last week, Tesla also announced that it would stop production of two of its earliest and lowest-selling electric vehicles and convert one of its factories in the United States to produce humanoid robots.
Musk, who has been leading the electrification wave for years, now seems to be turning his attention more to other areas, especially robots, driverless taxis, and his artificial intelligence company, which recently completed its merger with SpaceX in the largest corporate merger in history.
Meanwhile, the global market share of Chinese auto brands has soared by nearly 70% in five years, which many experts believe poses a threat to U.S. automakers, including the prospect of Chinese brands entering the U.S. domestic market.
Global car companies are generally worried that Chinese competitors such as BYD and Geely will release a large number of products into the global market, impacting local car production and vehicle prices in various countries. The United States has taken protectionist measures and imposed 100% tariffs on electric vehicles imported from China, but Chinese car companies have still successfully entered multiple markets such as Europe and South America.
The auto industry contributes about 5% of U.S. gross domestic product, and U.S. companies are worried about the long-term impact of this trend.
Many automobile industry experts have used the word "survivability" when talking about the development of Chinese automobile companies.
Elizabeth Creel, CEO of the Center for Automotive Research, said: "The existential risks facing the U.S. auto industry do not come only from Chinese electric vehicles, but from the combination of continued government support, vertically integrated supply chains, and efficient market execution that Chinese auto companies have received. These advantages have reduced production costs and accelerated business implementation. At the same time, the saturation of China's local auto market has also pushed auto companies to aggressively expand into the global market."
The rise of China's automobile industry
Since 2023, China's automobile industry has rapidly grown from a relatively closed industry to the world's largest automobile exporter.
Experts say that the rapid development of China's automobile industry is due to the government's financial support for enterprises, as well as the innovative culture and efficient work rhythm cultivated in the country. The slowdown in China's local market and insufficient factory capacity utilization have forced companies to start exporting products to major global auto markets.
According to statistics from Global Data Corporation, the global sales growth of China's electric vehicles has been particularly alarming, with an increase of nearly 800%; this is mainly due to the increase in China's local electric vehicle sales from approximately 572,300 units in 2020 to 4.95 million units in 2025. In overseas markets, China's electric vehicle sales soared by more than 1,300%, from less than 33,000 units to more than 474,000 units.
According to data from S&P Global Mobility, while China's auto industry is rising, the combined global market share of Detroit's "big three" auto companies - General Motors, Ford Motor, and Chrysler parent company Strantis Group, which has moved out of the United States, has dropped from 21.4% in 2019 to an estimated 15.7% in 2025.
In contrast, the global market share of China's two leading car companies, BYD and Geely, has increased from less than 3% to an estimated 11.1% in 2025.
On January 5, 2026, Hong Kong, China, the actual scene of BYD Auto Showroom.
The latest expansion plans recently announced by Chinese car companies point to Canada - a country with a relatively small car market that has eliminated 100% of its tariffs on imported Chinese cars due to a trade dispute with the Trump administration.
Prior to this, Chinese car companies had achieved rapid development in regions with low incomes and immature automobile industries such as South America, India, and Mexico, and these regions have always been growth markets for U.S. car companies. According to statistics from Dataforce, a German automotive data research company, Chinese car companies have also successfully entered the European market, with their share of car sales in Europe rising from almost zero in 2020 to nearly 10% in December 2025.
Al Bedivere, director of Global Automotive Power Systems Department at Global Data Corporation and a British industry expert, said: "The electrification transformation has brought convenience to Chinese car companies because they have launched products that meet market demand. It is the track of electric vehicles that has opened the door to the global market for Chinese car companies, otherwise all this would be impossible."
Bedwell also said that due to its lack of oil reserves, China has always wanted to get rid of its dependence on oil. "China has seen the opportunity to become an industry leader."
Global Data predicts that global sales of Chinese electric vehicles will continue to grow to about 6.5 million units by 2030 and close to 8.5 million units in 2035. This also includes continued growth in the U.S. market - in recent years, a number of Chinese-made cars, such as the Buick Envision, have entered the U.S. market.
Stephanie Brinley, chief automotive analyst at S&P Global Mobility, said: "Successfully and continuously entering the U.S. market is not easy. It requires time, capital investment and patience. It also requires companies to dare to trial and error on products and continuously improve until they meet market demand. It is expected that some Chinese car companies will have these characteristics and eventually seek to enter the U.S. market."
Brinley pointed out that Japan's Toyota entered the U.S. market in 1957 and only achieved a 10% market share in 2001; while South Korea's Hyundai Motor only achieved its 10% market share target in 2022 after 26 years of hard work in the U.S. market.
On January 13, 2026, in Dearborn, Michigan, the United States, U.S. President Donald Trump spoke on the same stage as Ford Executive Chairman Bill Ford during a visit to the Ford Motor Company's River Rouge plant.
Brinley said: "The United States is a mature automobile market, and its annual automobile sales are expected to remain stable between 16 million and 16.5 million units until at least 2035. New entrants will seize market share from existing brands and car companies. It remains to be seen how quickly Chinese car companies can win the recognition of American consumers, and which American car companies will lose sales and market share as a result."
The Alliance for Automotive Innovation, a lobbying group representing nearly every automaker in the U.S., is trying to prevent that from happening. In December, the alliance called on the U.S. Congress and the Trump administration to prevent Chinese government-backed auto and high-end battery manufacturers from building factories in the United States.
John Bozzella, CEO of the alliance, said in a statement submitted to a special committee of the U.S. House of Representatives: "Car companies doing business in the United States are facing geopolitical and market pressure from China, which directly threatens the global competitiveness and national security of the United States." He also mentioned China's unfair and anti-competitive trade practices and intellectual property theft issues.
The current state of the U.S. electric vehicle industry
During the U.S. government, car companies invested billions of dollars in developing and launching electric vehicles, driven by relevant regulations and incentive policies; but now, the Trump administration has almost overturned these policies.
Regulatory deregulation has allowed car companies to lower their emphasis on pure electric vehicle development plans.
General Motors and Ford Motor Company alone have recently announced impairment losses of more than US$27 billion due to the contraction of their electric vehicle business, including the cancellation of new model development and reduction of the production of existing models.
On Friday, Jeep automaker Strantis Group announced a loss of 22 billion euros (about $26 billion) due to a business transformation plan that includes shrinking its electrification layout and returning to V8 engines in U.S.-market models.
According to Cox Automotive, U.S. electric vehicle sales peaked in September last year, accounting for 10.3% of new car market sales before the U.S. federal electric vehicle incentive policy expired; in the fourth quarter of last year, preliminary estimates of this proportion had plummeted to 5.2%.
On Wednesday, General Motors Chief Financial Officer Paul Jacobson said that the Detroit giant, which has now become a regional car company in North America, has not given up on its electric vehicle business, but is adjusting its business scale according to natural market demand rather than blindly expanding to cater to regulators.
When asked about the global expansion of Chinese car companies, Jacobson said that General Motors "has the ability to compete with it," but only if a fair market competition environment is established - he once again emphasized that the United States should offset the subsidies that Chinese companies receive from the government through tariff policies.
Speaking at the Chicago Federal Reserve Auto Industry Conference in Detroit, Jacobson said: "The products of Chinese auto companies have brought a new level of competitive intensity and competitiveness to the market, so we must be prepared."
General Motors made China its largest sales market from 2010 to 2023, but it was unprepared for the rise of China's domestic auto industry. As China's auto manufacturing capabilities improve, General Motors' annual profits in China have fallen from about $2 billion in 2018 to 2025, recording losses for the second consecutive year.
General Motors' cross-town rival Ford Motor Co. has adopted a different strategy. The company has basically abandoned its research and development plans for large electric vehicles and instead focused on a new generation of small electric vehicles; Ford CEO Jim Farley believes that this will be a "life-saving straw" for the company against Chinese car companies.
Farley has repeatedly expressed his appreciation for Chinese car companies. He said that this new product platform will create a simple, efficient and flexible ecosystem and launch a series of affordable, software-defined electric models.
Farley said last year: "This is a critical moment for the company, comparable to the birth of the Model T. We clearly regard Chinese car companies as the core competitors of the next generation of electric vehicles, rather than other global car companies. Geely, BYD and other companies are our benchmark targets... Our model research and development is based on this positioning."
From car manufacturing to autonomous driving
American electric vehicle start-ups such as Rivian Automobile and Saudi Arabia-invested Lotus Group produce all their models in the United States, but they are now facing dual challenges in profitability and sales.
Affected by sluggish market demand, these start-ups have followed the example of Tesla, the leader of the US electric vehicle industry, and are trying to attract investment by marketing themselves as technology companies rather than mere car manufacturers to investors.
Musk has been warning Chinese car companies for many years. After the rise of BYD in 2023, he once said that without trade barriers, Chinese car companies will "crush" global competitors.
Although the vast majority of Tesla's revenue comes from car sales, leasing and repairs, Musk has historically positioned Tesla as "a technology company that also sells cars." In Tesla's latest quarterly earnings call, he took a key step: announcing the discontinuation of the Model S and Model X models, and transforming the Fremont, California factory into a production base for the Optimus Prime humanoid robot.
Following the original Roadster, Model S and Model X were Tesla's two earliest models, with the Model S sedan going on sale in 2012 and the Model X sport utility vehicle three years later. Sales of these two models will only account for about 3% of Tesla's total sales in 2025, and Tesla still sells the Model Y, Model 3, and Cybertruck.
In recent years, as competition in the global electric vehicle market has intensified, Tesla has repeatedly lowered the prices of the above-mentioned models on sale.
Musk believes that China will remain Tesla’s main competitor in the new business field of humanoid robots.
During Tesla's fourth quarter earnings conference call, Musk said: "There is no doubt that China will become our strongest competitor. There is no doubt about it. I have always felt that overseas people have seriously underestimated China's strength. China's competitiveness is top-notch, and its strength cannot be underestimated."