What China’s Electric Vehicle Boom Looks Like on the Ground
During a recent visit to China, I saw electric vehicles everywhere. Here's why the country's becoming a worldwide EV force.
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I just returned from a five-day trip to Wuhan, a major city in central China that was thrust into the international spotlight more than four years ago when it became the site of the initial Covid-19 outbreak. Situated along the Yangtze River, Wuhan is less well-known for having built one of the longest suspension bridges in the world.
Even in heavy traffic, driving across the bright red Yingwuzhou Yangtze River Bridge is surprisingly quiet. That’s because most of the cars on the road have green license plates, indicating they’re electric vehicles. Some of the EVs I saw were Tesla models common in Los Angeles where I live, but the majority were manufactured by Chinese brands, including BYD, Nio, Leapmotor, Xpeng, and Geely, as well as many other companies I had never heard of before.
One ride-hailing driver picked me up in a sleek electric Geely car that I initially mistook for a Tesla because of its futuristic auto-retracting door handles. Another driver ferried me across the bridge in an EV Leapmotor sedan with supple brown leather seats and three separate touch screens mounted across the dashboard. One morning while I sat on a stool slurping a bowl of noodles, I watched as a lime green EV Xpeng sports car zoomed across an intersection with all of the swag of a Ferrari and none of the engine noise.
Over the last few years, Chinese companies have flooded the market with a dizzying array of new EV models like the ones I saw during my trip. They’re often not only astonishingly affordable — running as low as $10,000 — but also packed with impressive features and unique details, such as projector screens, fridges, and “sleeping kits” that allow drivers to turn the back row into a bed. Consumers love them: In the fourth quarter of 2023, BYD, one of China’s leading automakers, overtook Tesla and became the top seller of EVs worldwide.
Lawmakers in the US, Canada, and Europe, however, see the rise of China’s electric vehicle sector as a pressing threat that could jeopardize the future of their own auto industries. In May, President Joe Biden introduced a 100% tariff on Chinese EVs and a 25% tariff on Chinese EV batteries, a move that will make it practically impossible for American consumers to access most electric cars made in China, at least in the short term. Canada followed suit last month, while the European Union announced more modest provisional tariffs in June ranging from 17% to 38%.
Western officials argue these measures are necessary to counteract the massive subsidies Beijing has doled out to Chinese EV makers and ensure they don’t have an unfair advantage in the global market. Since 2009, the Chinese government has provided at least $231 billion to companies like BYD, including for research and development programs, consumer rebates, and infrastructure like charging stations.
But by focusing solely on subsidies, it’s easy to miss the biggest reason why China’s electric vehicle industry has been so successful: It’s incredibly innovative. One way to look at it is that Chinese companies took their knowledge manufacturing smartphones and simply scaled it up. In fact, two of China’s top smartphone makers, Huawei and Xiaomi, have already unveiled their own EVs. (Apple, meanwhile, canceled its car project.)
BYD, which stands for “Build Your Dreams,” got its start in the 1990s making batteries for cell phones; it later became a supplier for Motorola and Nokia. When it began producing hybrid cars in 2008, BYD was able to use its in-house battery expertise to keep costs down. The company invested specifically in manufacturing LFP type batteries, which are made from iron and phosphate instead of more expensive materials like nickel and cobalt.
LFP batteries were once considered an engineering dead end because they ran out of charge much faster than their pricier counterparts. But BYD perfected the technology, and in 2020, it released an LFP battery that not only had a long range, but was also less prone to catching fire or exploding than other battery types. Tesla later began using iron and phosphate batteries in its lower-end cars as well.
Two of China’s top smartphone makers, Huawei and Xiaomi, have already unveiled their own EVs. Apple, meanwhile, canceled its car project.
To speed up production, Chinese EV makers built cars designed to receive regular software updates—just like an iPhone. One company known for using this strategy is Nio, which ships its EVs with extra computer chips so customers can download new features, like a timer that counts down how many seconds until a traffic light turns green.
But Nio is best-known for another technology: battery-swapping stations. When a car owner is low on juice, the automaker allows them to trade in their battery for a new one at a Nio facility—a process it claims takes only three minutes. This unique perk means Nio customers can avoid long lines at charging stations during Chinese holidays and other peak times.
Overall, more than 10 million EVs will be sold in China in 2024, compared to just 1.7 million in the United States, according to projections by the International Energy Agency. The gap between the two countries can be attributed to a number of factors in the US, including high costs, lack of consumer choice, and America’s fondness for huge, gas-guzzling vehicles like the Ford F-series, the best-selling car in the country for over 40 years.
In June, the average price of a new electric car in the US was roughly $56,000, compared to $48,000 for any kind of passenger vehicle, according to the research firm Cox Automotive. Only about five electric models with a starting price of less than $40,000 have come on the US market so far in 2024. For comparison, the average price of an EV in China is roughly $30,000, and BYD’s entry-level model in the country sells for about $10,000.
American car companies are also releasing fewer new EV models at any price point compared to their Chinese counterparts. At the Beijing auto show this spring, carmakers debuted around 100 commercial models and concept vehicles, while at the Detroit auto show in September, there was only one entirely new car on display and it wasn’t an EV, according to journalist Kevin Williams, who attended both events.
Overall, more than 10 million EVs will be sold in China in 2024, compared to just 1.7 million in the United States
Even Tesla—by far the most successful EV company in the US—is currently struggling. Amid slowing sales and growing competition, the automaker has repeatedly slashed its prices, including in the US, where it now accounts for less than 50% of the market. In July, Tesla announced its profits fell 45% in the second quarter compared to the same period last year. Since January, it has reportedly laid off more than 14% of its total workforce.
At the same time, Chinese EV makers are expanding all over the world. BYD just took over an old Ford factory in Brazil, and it’s planning to open car plants in Hungary, Turkey, and other countries. It’s already one of the most popular EV brands in Thailand, Sweden, Israel, and Australia, according to The Wall Street Journal. By 2027, over 20% of electric vehicles sold in Europe will be from Chinese companies, according to one estimate.
For now, the new tariffs will likely discourage BYD and other Chinese EV makers from entering the US market. Environmental advocates worry that could slow down the transition away from fossil fuels and exacerbate the effects of climate change. It could also lead to a strange future where electric vehicles become far more common in places like Bangkok, Istanbul, and Wuhan than major American cities like New York and Los Angeles.
But a different, yet equally plausible scenario is that US automakers will succeed in catching up with their Chinese counterparts over the next few years. One way they could do that is by forming more partnerships with top Chinese tech firms.
Last year, for example, Ford announced it was building an EV battery plant in Michigan using tech from leading Chinese battery maker CATL. Local and federal lawmakers protested the project, and Ford had to deal with the political fallout for months. But a scaled-back version of the plant is still being built, and CATL is also supplying equipment to Tesla for another battery plant in Nevada.
Expanding these kinds of initiatives could help US car makers adopt cutting-edge technology from China “the same way that China itself used Tesla to turbocharge its own EV industry,” Princeton researcher Kyle Chan has argued in his newsletter High Capacity.
Another idea is for Western car companies to form more partnerships with each other. In June, Volkswagen announced it was investing $1 billion in luxury US EV maker Rivian, as well as an initial $1 billion in a joint venture focused on developing software for electric vehicles.
Volkswagen is already the fourth-largest EV manufacturer in the world but it has struggled to develop advanced software integrations—an area where Rivian excels. In return, Rivian, which still loses tens of thousands of dollars on each car, will get a much-needed injection of cash.
There are also already a number of signs the American electric vehicle market is improving and China’s is starting to slow down. China exported 13% fewer EVs in June than it did in May, marking the third consecutive monthly decline since March, according to the China Association of Automobile Manufacturers, indicating that increased trade tensions with Europe are taking a toll on the industry.
Meanwhile, the cost of buying a secondhand EV in the US has fallen dramatically, making it possible for many people to purchase a clean energy vehicle for the first time. Ford and General Motors both recently reported they’re selling significantly more EVs in 2024 than they were last year, thanks in part to a new law that provides consumers who buy US-made electric vehicles up to $7,500 in tax rebates.
Then there’s Tesla, which is undoubtedly facing serious headwinds. One issue is Musk’s divisive political opinions, which have hurt Tesla’s brand and turned off some would-be buyers. But Tesla’s trailblazing history and brand still loom large, and it remains the most valuable car company in the world by far, towering above even legacy automakers like Toyota and Mercedes Benz.
Despite their newfound success, Chinese competitors know overtaking Tesla will be no easy feat. During a speech at the Beijing auto show earlier this year, Lei Jun, the chief executive of Xiaomi, reportedly said he believed that his company had surpassed nearly all of its competitors. “Except Tesla,” he noted.
Louise Matsakis writes You May Also Like, a newsletter about tech, e-commerce, and China. She wrote about Shein and Temu’s threat to Amazon in May: