China's electric vehicle (EV) industry is rapidly ascending to the forefront of global innovation and is eager to gain worldwide recognition. The Shanghai auto show showcased China's advancements, displaying everything from fast-charging electric batteries to flying vehicles and advanced driving assistance technology.
China's EV Prowess
Unlike previous years, where traditional automakers like GM, Volkswagen, and BMW dominated, this year's Shanghai auto show spotlighted China's EV pioneers. BYD, a leading EV manufacturer and China's top automaker, unveiled its highly anticipated electric sports car, the Denza Z, which was described as "a testament to pure emotional design" and "extreme performance". Xiaomi, a Chinese electronics giant turned carmaker, and Nio, with its luxury ET9 sedan, also drew significant attention.
Chinese consumers now view domestic brands as equals to foreign ones, leading to increased purchases from local automakers in 2023. China commands over 60% of the rapidly expanding global EV market.
Overcapacity and Competition
The domestic landscape is fiercely competitive, with numerous local automakers engaged in a relentless price war, striving to outdo each other in technology and value. This competition has led to rapid advancements; for instance, CATL, a Chinese battery giant, announced it could achieve approximately 320 miles of range with a five-minute charge, surpassing BYD's earlier achievement.
However, this intense competition and overcapacity have led many Chinese EV manufacturers to struggle to turn a profit. As Tu Le, founder of Sino Auto Insights, noted, exporting is vital for many of these companies to find "breathing room" in markets with fewer Chinese competitors.
Trade War and Global Expansion
Trump's trade policies have had a limited impact on China's EV manufacturers, as they had already sought growth in alternative markets following the imposition of tariffs and restrictions during the Biden administration. The US and Canada imposed 100% tariffs on Chinese EVs last year, and the European Union initiated an investigation into alleged unfair subsidies, raising its tariffs as high as 45%. China's EV manufacturers exported 441,000 EVs, including hybrids, in the first quarter of this year, up more than 40% from the same period last year.
Government Support and Innovation
The Chinese government has played a crucial role in supporting the EV industry through strategic subsidies, investments in charging infrastructure, and emissions reduction targets. Estimates for these subsidies vary, with analysts suggesting total government support could range from over $50 billion in a decade to as much as $200 billion between 2009 and 2023. Additionally, Beijing has aggressively sought the raw materials necessary for EV battery production, now dominating those supply chains.
Transforming the Global Market
China's success has transformed the global EV market, with the country now accounting for nearly half of all passenger vehicle sales with new energy vehicles (NEV). Half of the new cars sold in China are battery EVs or hybrids. In March 2025, plugin vehicles crossed the 50% market share threshold, reaching 52%. Full electrics (BEVs) alone accounted for 34% of the country’s auto sales, making BEVs the best-selling powertrain in China, above petrol vehicles and HEVs.
Foreign automakers are now seeking collaborations with Chinese companies to leverage local innovation and regain customers. Volkswagen, for example, has emphasized its "in China, for China" strategy, with plans for more local development, new tech partnerships, and faster implementation.
Challenges and Future Outlook
Despite its successes, the Chinese EV industry faces challenges, including overcapacity, intense competition, and trade tensions. However, the industry's rapid innovation, combined with government support and a growing domestic market, positions China as a dominant player in the global EV market.
As the world transitions to electric vehicles, China's EV industry is poised to lead the way, potentially reshaping global trade and technology.
