The "Zero-Mile" EV Export Phenomenon: China's Strategy to Global Markets
A peculiar trend has emerged from China's booming electric vehicle sector, shedding light on how the world's largest automotive market is addressing its production surplus. Rather than directly exporting new vehicles, Chinese manufacturers are increasingly channeling what are termed 'zero-mile' used EVs into international markets. This unique approach involves registering brand-new electric cars domestically to count them as local sales, often incentivized by government policies, before swiftly deregistering them and dispatching them overseas as pre-owned units. This creates a lucrative grey market, allowing automakers to bolster their reported sales volumes and exporters to earn substantial profits, often around $1,400 per vehicle. The primary destinations for these vehicles include Russia, Jordan, and various countries in Central Asia and the Middle East, where they are acquired at significantly lower prices.
Surprisingly, this unconventional export method has not gone unnoticed by local Chinese authorities; in fact, it has been actively endorsed and facilitated by at least 20 local governments since 2019. These regional entities perceive the practice as crucial for achieving economic growth targets set by Beijing. Their support manifests in various forms, including issuing additional export licenses for these 'used' vehicles, expediting tax rebate processes, investing in export-specific infrastructure, and organizing networking events to promote such exports. Some cities, like Shenzhen, have even articulated ambitious goals to significantly expand vehicle exports through these means, believing it stimulates domestic sales. This strategy, however, has sparked a debate within the Chinese auto industry regarding the existence and implications of EV overcapacity. While some industry leaders, such as Parker Shi of Great Wall Motors, dismiss overcapacity as a 'fake concept,' others, like Geely's founder Li Shufu, openly acknowledge it as a serious issue contributing to ongoing price wars in the domestic EV market.
The global community is beginning to scrutinize this practice, with destination countries implementing measures to counter the influx of these technically 'used' but effectively new vehicles. For instance, Russia has moved to restrict imports of zero-mile used cars from brands with official distributors, and Jordan is contemplating altering its definition of 'used' vehicles. Industry analysts suggest that this export model serves as a means for China to offload heavily subsidized EVs abroad, particularly as traditional major markets like the U.S. and Europe impose tariffs, making them less viable dumping grounds. The sustainability and long-term reputational impact of these tactics are increasingly being questioned. Beyond mere economic ramifications, such opaque practices can undermine fair competition and erode trust in global trade. It is essential for all parties to foster transparency and ethical conduct to ensure a healthy and equitable global automotive landscape, paving the way for genuine innovation and progress in electric mobility worldwide.