3 Drivers of China’s Booming Electric Vehicle Market (2024)

FAQs

Why is China leading in electric vehicles? ›

The country's strength in the manufacture and supply chain for EV batteries underpins the growth of its wider EV industry. In fact, China's largest EV manufacturer, BYD Auto, was originally a battery maker that supplied mobile phone companies. In the 2000s, the company entered the EV market.

In terms of constraints, three factors including charging infrastructure, purchase cost, and government financial incentives may also influence the Chinese willingness to adopt electric vehicles.

Urbanization. Smaller, more efficient cars are generally more prevalent in urban areas, where average daily driving distance is much shorter. Over 50% of the global population is projected to be living in cities by the year 2030, which will drive up demand for electric vehicles.

Domestic automakers are increasingly dominating that market while also racing to expand around the world. China's EV exports shot up 77% last year, and Shenzhen-based BYD is now the world's second-ranked seller of battery electric vehicles, after Tesla.

Chinese companies had a breakthrough. They tamed a refining process that was once unwieldy, unlocking Indonesia's expansive deposits for the nickel-hungry EV industry. In doing so, they established Chinese dominance over what has grown into the world's largest source of the commodity.

Companies like BYD not only manufacture EVs but also produce their batteries, which helps in reducing costs and ensuring supply chain security. This control over the supply chain gives them a competitive edge in terms of cost, quality, and supply reliability.

Reality: Consumer interest in electric vehicles has been steadily increasing, driven by various factors such as environmental consciousness, government incentives, advancements in battery technology that improve range, and a growing charging infrastructure.

China is pursuing a different path with EVs compared to Europe and North America, choosing to emphasise smaller and cheaper city cars that can compete, and even out-compete equivalent internal combustion engine (ICE) vehicles.

The willingness to purchase, battery capacity [11], infrastructure for charging [12], purchase cost, government policy [13], environment awareness, social influence, fuel prices, and maintenance cost were all accepted.

The reasons for the EV market's growth are manifold: consumer concerns about climate change; advances in battery technology that allow EVs to travel farther than ever on a single charge; increasing affordability; and the growing availability of hundreds of EV models that appeal to a wider swath of customer demographics ...

Why does China keep making more cars than it needs? ›

Yet the government continues to support companies such as Zhido and others, encouraging unprofitable carmakers to keep producing as officials try to boost economic growth, preserve jobs and expand China's role in the global electric-vehicle business.

Given more competitive prices of Chinese EVs compared to those produced in Europe and the US and a more developed battery sector, we may see increased pressure on European and US automakers to lower their EV prices in order to remain competitive.

Chinese EVs already make up 60 percent of worldwide sales, according to International Energy Agency, a Paris-based energy consultant. Tesla and BYD have been battling it out for market share for the last couple of years.

Thanks to hefty government investment, cheap labor and their country's robust reserves of key minerals, Chinese automakers have developed a wide range of EVs that are of comparable quality to anything made in the United States but often sell for a fraction of the price.

In recent times, BYD has started to invest heavily into pure electric cars. They ramped up the production so hard that they became the largest EV manufacturer in the world, before Tesla. BYD is also the best selling brand in China overall, a title that they took from VW.

As of 2024, China is the country with the most electric cars in the world – and by a long shot. In 2021, there were 417 million registered vehicles in China, 319 million of which were passenger cars. Of that, 13.1 million were “new energy vehicles” – those with electric, hybrid or hydrogen fuel cell powertrains.

China has the world's largest electric car market, with over 100 electric car manufacturers, China is many years ahead of the rest of the world. The key is money, it is always about money. They are cheap to buy.

China's dominance in battery production

CATL accounts for two-thirds of global battery production, and is a supplier for Tesla, as well as other major automakers such as Volkswagen AG and Toyota Motor Corp.

China's dominance in electronics manufacturing is not just due to cheap labor; it's a combination of strategic planning, skilled workforce, supply chain advantages, and a burgeoning local market.