How did China become the world’s largest manufacturer of electric vehicles?

As electric vehicles enter our lives, China, as the world’s second largest economy, has also attracted much attention in recent years for its breakthroughs in this field.

So how did a country that didn’t even have a decent auto industry a few decades ago become the biggest player in the electric car industry in recent years?

About a decade ago, President Xi Jinping made a very important speech during his visit to SAIC, one of China’s largest automakers, which would put China on the path to dominance in the electric vehicle industry.

At the time, Xi Jinping said that the way to become a strong automobile manufacturing country is to “develop new energy vehicles” and said that getting a good start in this field is the key to global competition.

At the time, local Chinese automakers and brands that did not work with foreign partners were seen as backward and of inferior quality in engines and other automotive technology.

The key to competition

China has since focused on energy-efficient and alternative energy vehicles to get ahead of global competition and overcome environmental challenges.

The government issued a guideline in 2012 that identified ways to develop the industry by setting sales targets, providing subsidies and allocating resources to build charging infrastructure.

The policies are seen as key to China’s overtaking Western and Asian auto giants, especially Toyota Motor’s home base in Japan.

On the other hand, Tesla built its Shanghai factory in 2019 with special permission. Tesla’s entry into the market encourages local companies to produce electric vehicles with longer range and better performance.

Largest supplier

China has become the world’s largest auto market by 2024, selling more electric vehicles than any other country, with 9.5 million vehicles delivered last year. It also controls much of the battery supply chain.

Chinese electric car maker BYD surpassed Volkswagen to become China’s best-selling brand last year and surpassed Tesla in the last quarter of 2023 to become the world’s largest electric car maker.

China also exported 4.1 million vehicles abroad, of which 1.5 million were electric or plug-in hybrid vehicles. With this, China surpassed Japan to become the world’s largest automobile exporter.

Growing tensions with the West

While the sales achieved demonstrate the success of Beijing’s industrial policies, they have also led to increased tensions with the West. China’s success in electric vehicles has become a major irritation for Washington and Brussels.

Slowing growth at home is prompting Chinese automakers to look elsewhere for buyers for affordable vehicles. China also faces trade barriers from the European Union and the United States, which are trying to develop their own electric vehicle supply chains. Western countries accuse China of exporting excess capacity.

The United States has quadrupled import tariffs on Chinese cars to more than 100%, while the European Union has launched an investigation into whether Chinese electric car makers are gaining an unfair advantage from state subsidies. Russia, on the other hand, has asked Chinese automakers to consider localizing production.