“I drive an electric vehicle because it’s economical,” states Lu Yunfeng, a ride-share driver charging his vehicle on the outskirts of Guangzhou.
Sun Jingguo, another driver nearby, concurs. “The running costs of a gasoline car are prohibitive. Electric vehicles offer significant savings,” he explains, leaning against his Beijing U7. “And, of course, it’s better for the environment,” he adds.
This conversation exemplifies a reality reshaping the global automotive landscape. While EVs are often viewed as luxury goods in many nations, in China – where nearly half of all car sales in 2022 were electric – they are increasingly commonplace.
China’s strategic vision at the turn of the millennium prioritized technological leadership. Once a nation synonymous with bicycles, it now leads the world in electric vehicle production.
In Guangzhou, a city of over 18 million, the cacophony of rush hour traffic has been replaced by a quieter hum.
“In the EV sector, China is a decade ahead and significantly more advanced than any other country,” asserts automotive analyst Michael Dunne.
BYD, a Chinese manufacturer, now tops the global EV market, surpassing Tesla earlier this year. This success is fueled by a massive domestic market of over 1.4 billion people, and the company is now expanding its international presence, mirroring the strategies of numerous other Chinese EV startups focused on affordable, mass-market vehicles.
This raises key questions: how did China achieve this dominance, and can its lead be challenged?
Analysts often attribute China’s EV success to Wan Gang, a German-trained engineer who became the country’s Minister of Science and Technology in 2007. “He observed that China was the world’s largest car market, yet the streets were filled with foreign brands,” Dunne notes.
At the time, Chinese automakers struggled to compete with established European, American, and Japanese brands in terms of quality and prestige. However, China possessed substantial resources, a skilled workforce, and a robust automotive supply chain. Wan Gang’s strategy was to “redefine the game by focusing on electric vehicles,” according to Dunne.
While EVs were included in China’s five-year economic plans as early as 2001, significant government subsidies to support industry growth didn’t begin until the 2010s. China’s capacity to mobilize its economy toward long-term goals, unlike many Western democracies, is noteworthy.
The Center for Strategic and International Studies (CSIS) estimates that Beijing invested approximately $231 billion from 2009 to 2023 in developing its EV industry. This support extends across the entire value chain, from consumers and automakers to electricity providers and battery manufacturers.
This support enabled BYD’s transition from smartphone batteries to EVs and fostered the growth of CATL, a Ningde-based company founded in 2011, which now supplies batteries to Tesla, Volkswagen, and Ford, accounting for a third of global EV battery production.
This combination of strategic planning and substantial government investment enabled China to dominate key supply chains, particularly in battery production, and develop the world’s largest public charging network.
“Currently, if you need EV batteries, your path leads through China,” Dunne emphasizes.
While some characterize this as “state capitalism,” others view it as unfair competition. Chinese EV executives counter that all companies, domestic and foreign, have equal access to resources, resulting in a fiercely competitive and innovative industry.
Brian Gu, president of XPeng, states, “China’s approach, while involving policy support and infrastructure development, fosters a highly competitive environment without favoritism.”
XPeng, a leading Chinese EV maker, exemplifies this success. Despite its relatively young age and lack of profitability, it’s among the world’s top 10 EV producers, attracting top graduates and showcasing a modern, tech-focused corporate culture.
Despite this vibrant atmosphere, Mr. Gu acknowledges the intense pressure to deliver superior vehicles at competitive prices. The BBC test-drove XPeng’s Mona Max, priced around $20,000, which features self-driving capabilities, voice activation, and other advanced features considered standard by young Chinese buyers.
David Li, co-founder of Hesai, a LiDAR technology provider, observes that the new generation of EV makers views cars as fundamentally different products. While advanced technology is appealing to consumers, significant government spending makes EVs financially attractive, according to CSIS.
Subsidies for trading in older vehicles, tax exemptions, and discounted charging rates incentivize EV adoption. These benefits motivated Mr. Lu to switch two years ago, reducing his fuel costs by 75% and eliminating the high cost of vehicle registration plates, a common expense in China aimed at managing traffic and pollution.
“Wealthier individuals opt for gasoline vehicles due to their financial resources,” Mr. Lu explains. “For me, an EV is the practical choice.”
Daisy, an EV owner in Shanghai, highlights the convenience of battery swapping stations provided by Nio, replacing her depleted battery with a fully charged one in under three minutes – a process cheaper than refueling a gasoline vehicle.
China’s government subsidies have drawn criticism from countries seeking to safeguard their domestic auto industries. The US, Canada, and the EU have imposed tariffs on Chinese EVs. However, the UK has not adopted similar measures, making it an attractive market for companies like XPeng and BYD.
This is advantageous for Western governments aiming to accelerate the transition to EVs, a crucial step in mitigating climate change, as the UN emphasizes. Many Western nations, including the UK, plan to ban the sale of gasoline and diesel cars by 2030, and China is uniquely positioned to assist in this transition.
“China envisions a future where it supplies the majority of the world’s vehicles. They’re asking, ‘Can anyone do it better?'” Dunne states. “Automakers in Detroit, Nagoya, Germany, and elsewhere are questioning their prospects in this new era, and China is remarkably confident.”
Despite the environmental advantages, concerns remain regarding reliance on Chinese technology. Claims that Chinese EVs could be remotely controlled have been raised, though dismissed by BYD executives who emphasize their commitment to robust data security.
Nevertheless, these concerns mirror previous debates surrounding Chinese technology, including Huawei and TikTok, which faced restrictions in several Western nations.
For Sun Jingguo, however, the message is clear: “I believe the world should thank China for introducing this technology,” he laughs. “I certainly do.”
Additional reporting by Theo Leggett, international business correspondent in London.