Chinese Automakers Need Side Hustles Because They Can't Make Money On Cars

China has held the mantle as the world’s largest new vehicle market for 17 straight years, which explains why long-established legacy automakers have jumped through so many hoops for a piece of the action. But what once was the envy of automotive executives from Detroit to Stuttgart has overheated with capacity to build way too many vehicles for the domestic market. There are about 150 automakers in China today, and only about a dozen are likely to survive the great purge. Something’s gotta give.

2026 Beijing Auto ShowBeijing Auto Show

Clearly, dozens of Chinese automakers (and their employees) are looking for new business opportunities, and what better place to do so than at the world’s largest automotive expo? The 2026 Beijing Auto Show started April 24 and ends on May 3, and the Society of Automotive Analysts recently hosted a webcast with Tu Le, founder and managing director of Sino Auto Insights, who has lived and worked in China, Silicon Valley, and Detroit.

After spending a few days at the show, Tu said he noticed some Chinese automakers demonstrating their capabilities beyond cars – meaning humanoid robots, silicon chips, artificial intelligence, and eVTOL air taxis. It turns out, building cars is a rough gig and many automakers in China simply can’t make money doing it.

BYD Pushes Charging Tech

Automotive analyst Tu Le discusses 2026 Beijing Auto ShowSociety of Automotive Analysts

These efforts to project an image as diversified wasn’t limited to the smallest Chinese automakers that might be perceived as the most vulnerable. Consider BYD, the best-selling car brand in China and the No.1 seller of battery-electric vehicles globally, even topping Tesla last year. Still, its first-quarter 2026 net profits plunged 55%, and Tu noted that BYD’s executive vice president, Stella Li, was doing a lot of international media interviews at the show.

China’s Auto Industry Could Shrink As Quickly As It Expanded

Can legacy automakers compete with China’s “135 new entrants that sell vehicles below the cost of materials?” They may not have to.

“BYD diversified because they know the intensity of the China market is not for the faint of heart.”

–Tu Le, founder of Sino Auto Insights

Tu said during the webcast that beyond trying to grow in international markets, BYD is pushing its EV charging technology as a marketable asset. “One significant thing that Stella emphasized across different interviews was that their charging is what differentiates them from everybody else,” he said.

Also during the Beijing show, Tu said he visited XPeng headquarters in Guangzhou to see a demo of the company’s eVTOL as well as a bespoke truck for transporting it.

XPeng eVTOL demonstration during 2026 Beijing auto show.XPeng

A key takeaway for Tu was that XPeng Motors changed its name to XPeng Group, effective April 1, similar to Apple Computer changing its name to Apple Inc. in 2007 to project broader diversification.

“They want you to think they’re a technology company and not a car company,” Tu said of XPeng, and he noted similar “dabbling” for other Chinese automakers at the show. “The impression I got is that, ‘we’re not going to be able to make a lot of money selling EVs, so we’re going to diversify out of EVs.'”

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Silicon As Salable Asset

As XPeng designs its own silicon, Tu expects the company is “probably going to sell it to Volkswagen for some of their vehicles. So, there are revenue-generating opportunities, hopefully, as they diversify out. And I’m talking more than XPeng, because other companies are doing similar things.”

The Beijing show is quite the spectacle, filling 17 halls (the equivalent of 70 football fields) with 1,451 vehicles on display, including 181 world premieres and 71 concept cars.

Peugeot Concept 6 sedan and Concept 8 SUV revealed at 2026 Beijing Auto ShowPeugeot

In addition to Chinese manufacturers, European, Japanese, and Korean brands were well represented, along with Ford, Lincoln, Buick, and Cadillac, which hosted an event to launch the Vistiq EV crossover. Tu noted the significant difference between Chinese shows (Shanghai will host next year’s expo) and the US auto shows, where American brands only “participate half-heartedly.” He said he was surprised how few top executives from US automakers attended this year’s Beijing show.

Does this mean we will see fewer cars and more products from the companies that, for now at least, some American automakers fear? One thing can be said for certain – China’s market is vastly different from that in the US, and it doesn’t appear to be sustainable in its current state for much longer.

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