China happens to be the world’s biggest user, manufacturer, and seller of electric vehicles. With over 20 million EVs on its roads at present, China is by far the industry’s world leader.
In contrast, the US and Europe, where electric cars originated, are lagging. In the US, EVs made up just 10 percent of new car sales in 2023, and the growth rate has been slowing.
While Europe fared better, with EVs accounting for around 22 percent of new vehicle sales. The market there is also facing a cooldown due to high manufacturing costs and the rollback of subsidies in countries like Germany.
Meanwhile, EV sales in China went up by a whopping 35 percent during the same period. So what’s driving this unprecedented growth and positioning China as the world leader in electric vehicles?
The Chinese government put everything in place
China’s rise as an EV superpower is not a coincidence, but the result of a long-term, carefully planned strategy that combines great policies, infrastructure investment, and strong government support for clean energy.
More than a decade ago, China identified electric mobility as a key area for future growth, partly because it wanted to reduce its dependence on oil imports and improve air quality in its cities.
It offered generous subsidies to EV manufacturers and buyers, while also investing heavily in the supply chain from lithium mining and battery production to vehicle assembly and public charging stations. A report suggests that between 2009 and 2023, the Chinese government spent over $230 billion to support its EV industry.
As a result, today, China has over 8.5 million public EV charging points. This is more than the rest of the world combined. It also dominates the battery supply chain, with companies like CATL and BYD producing the majority of the world’s EV batteries.
“They want to electrify everything. No other country comes close to China,” Robert Liew, a renewable power research analyst from Wood Mackenzie, told the Financial Times.
This has given Chinese automakers a huge cost advantage. For instance, while many EVs in the US and Europe are still priced as luxury or premium vehicles, two-thirds of EVs sold in China in 2023 cost less than their gasoline-powered counterparts. As a result, EVs are now seen as a practical and affordable choice for Chinese consumers, not just an eco-conscious statement.
China may see the rise of more BYDs
BYD, which started as a battery company, is now the largest EV maker in the world. In 2024, the company overtook Tesla in global electric vehicle sales and revenue, signaling a shift in industry leadership.
With over 37 percent market share, CATL, another China-based company that was founded as recently as 2011, is now the biggest EV battery producer and seller globally. However, the road ahead for these industry leaders won’t be easy — not because of their US and Europe-based rivals, but because of intensifying competition within China itself.
A key factor that sets China apart is its thriving domestic competition. Unlike in the West, where, except for Tesla, legacy automakers like Ford, GM, or Volkswagen dominate, China has encouraged a wide range of startups to enter the EV space. For example, companies like XPeng, Li Auto, and NIO are constantly innovating, adding features like advanced autonomous driving or battery-swapping technology.
These new-age Chinese companies are doing such a phenomenal job that even legacy companies are investing in them. In 2023, Volkswagen acquired a five percent share in Xpeng, a company focusing on the development of smart and high-tech autonomous electric vehicles.
For now, China seems like a clear winner in the EV race. However, the EV market has just begun to grow. The US and Europe still have a chance to up their game, but to do so, they need to take bold steps. This includes investing in battery production, creating EV-friendly infrastructure, offering huge subsidies, and supporting domestic EV innovation.
If Western automakers didn’t do this, they might be left behind or even face an existential crisis as the world transitions to electric mobility. This could be understood from the fact that in 2024, Chinese EV makers already acquired major market share in countries like Mexico, Thailand, Australia, and Israel.
The big question now is whether the US and Europe can catch up and compete with China’s growing dominance in the EV industry.
