How China nurtured its electric vehicle industry for 23 years
Since 2001, China has chosen electric vehicles as the direction to develop the auto industry, escaping competition from major car companies.
China is now the world’s largest producer of electric vehicles. In 2022, the country accounted for 59% of global electric vehicle sales, according to data from EV Volumes, with new energy vehicle sales up 82% year-on-year to more than 6 million. In 2023, sales rose to 8.4 million, still accounting for 59% of the world. China also dominates global electric vehicle production, accounting for 64% in 2022.
Government led
According to an analysis by MIT Technology Review , from the early 2000s, China realized that despite developing its auto industry, the country still could not challenge the giants of the US, Germany, and Japan, which were very strong in internal combustion engines. Japanese automakers were also leading the field of hybrid vehicles.
So the country took the electric approach, despite the higher risks. And it succeeded. Twenty-three years ago, in 2001, the government made electric vehicle technology a priority research project in its five-year plan – the start of a high-level economic strategy. In 2007, Wan Gang, a former engineer at Audi Germany and an electric vehicle specialist, was appointed minister of science and technology. Wan’s influence is evident in his consistent prioritization of electric vehicles.
The government has supported growth through a series of incentives that have helped boost both supply and demand. Between 2009 and 2022, it has spent more than $28 billion on subsidies and tax breaks. For example, by 2022, electric vehicle buyers can benefit from rebates of up to $8,000.
BYD Seagull - electric car priced at 9,700 USD in China. Photo: BYD
Many local governments continue to provide strong support when people buy electric cars. In 2023, the government announced a 4-year extended tax incentive package for customers buying electric cars worth more than 72 billion USD. The support will be halved in 2026 and 2027.
In addition to consumers, manufacturers are also benefiting. An analysis by Nikkei Asia in 2023 found that five of the 10 automakers that received the most government subsidies in the first half of the year were domestic EV and battery makers. BYD, China’s largest EV maker, received more than $244 million, while SAIC received more than $275 million.
The Chinese government has also supported innovation in this area, offering procurement contracts to a range of new electric vehicle manufacturers to help them stay afloat and stay afloat. This strategy has focused primarily on public transport. Since around 2010, the government has offered contracts to public bus systems and other modes of transport, providing the industry with real-world test data and revenue. For example, Shenzhen—the first city to have an electrified public bus fleet—has a close relationship with BYD. A 2016 study found that support from the central government and local governments was “the core of BYD’s expansion.”
Along with financial support for the auto industry, China has also prioritized and supported the development of the infrastructure needed for electric vehicles. The country has 1.8 million public electric vehicle charging points: 14 times more than in the United States, despite having only four times the population. China Electric Power is a major provider of charging points and works with local governments to make it easier for drivers to charge their vehicles.
In Laiwu District, Jinan City, Shandong Province, Laiwu Electric Power Company - a subsidiary of China Electricity Group - has invested in 75 charging stations and 280 cabinets, creating a "10-minute charging cycle" to bring peace of mind to electric vehicle owners.
Licensing policies for electric vehicles also help encourage growth. To reduce pollution and congestion, many major cities restrict license plates to internal combustion engine vehicles — with lottery systems used in Beijing and Shanghai. By contrast, it is easy to get a license plate for an electric vehicle. Shanghai, for example, will still issue free license plates for electric vehicles in 2023, while 70% of the 100,000 additional plates for Beijing will be for electric vehicles.
Mastering battery technology - the heart of electric vehicles
In addition to vehicle manufacturing, China has also established a global leadership in electric vehicle batteries. With batteries accounting for around 40% of the cost of a new electric vehicle, the country has focused on developing the right technology. Many Western electric vehicle makers have traditionally preferred nickel-manganese-cobalt (NMC) batteries, which offer longer range and higher efficiency. In contrast, Chinese manufacturers have favored lithium-iron phosphate (LFP) batteries, which are cheaper and more reliable.
By focusing on LFP battery innovation, CATL has become the world's leading battery manufacturer, with over 33% of the global market. In 2022, BYD will be in second place, along with a very strong competitor from Korea, LGES.
How China nurtured the electric vehicle industry for 23 years - 1
China’s prowess in battery manufacturing is also aided by its quick and easy access to raw materials, thanks to a long-term strategy of buying stakes in key mining companies that extract minerals like lithium. China also controls “much of the world’s refining capacity for key components,” according to MIT Technology Review .
These sectors are contributing to the country’s growing dominance in electric vehicle batteries. According to SNE Research, a global battery industry research organization, in the first three quarters of 2023, six of the top 10 battery companies were Chinese, accounting for 62.9% of the global lithium battery market.
Major Players
The country’s strength in EV battery production and supply chains has underpinned the growth of the EV industry. In fact, China’s largest EV maker, BYD , started out as a battery maker that supplied mobile phone companies. It entered the EV market in the 2000s. It now sells the most pure EVs in the world, surpassing Tesla in 2023. BYD also dominates the domestic EV market. In 2023, it sold 2.7 million new energy vehicles (including electric and hybrid vehicles) with a market share of 35%—the only company with a market share of more than 10%.
BYD’s success stems from improvements in battery technology. In 2020, the company launched the Blade battery, which offers good energy density in addition to high safety. Blade batteries are used in BYD electric vehicles, such as the Han sedan, as well as in Tesla, Toyota, and Mercedes cars. BYD also received $230 million from billionaire Warren Buffett’s investment company Berkshire Hathaway in 2008.
BYD also benefits from its ability to control almost its entire supply chain, with close ties to mining and processing companies. Senior managers told VnExpress in April that “the only things we don’t produce ourselves are glass and tires.” Strategic partnerships with other companies, including in the auto industry (Toyota, Daimler), or in other areas such as software (Baidu), have helped BYD grow.
Doanh số xe NEV (plug-in hybrid và thuần điện) tại Trung Quốc 2023
Đơn vị: xe. Nguồn: Hiệp hội các nhà sản xuất ôtô Trung Quốc
2 706 0752 706 075
603 664603 664
483 632483 632
469 427469 427
457 848457 848
384 915384 915
376 030376 030
236 856236 856
160 038160 038
144 155144 155
BYD
Tesla
GAC Aion
Geely
SAIC-GM-Wuling
Changan
Li Auto
Great Wall
Nio
Leapmotor
0
250k
500k
750k
1 000k
1 250k
1 500k
1 750k
2 000k
2 250k
2 500k
2 750k
3 …
VnExpress
The second-largest share of the electric vehicle market will be held by a foreign company, Tesla, with 7.8% in 2023. Western carmakers have traditionally operated in China through joint ventures. But since 2019, Tesla has had its own factory in Shanghai, which has received support from both the local and Chinese governments and currently produces 150,000 vehicles a year.
Tesla mainly targets the high-end segment, while BYD focuses mainly on affordable models, such as the Seagull - one of the cheapest electric cars in the world.
At the moment, competition between Tesla and Chinese automakers is getting fiercer. Another leading electric car company, Geely, is also increasing its competition with Tesla through its premium brand Zeekr.
While established foreign brands such as BMW and Volkswagen have enjoyed years of success in China, the growing popularity of electric vehicles is eating into their market share. Now these Western companies face a major challenge in defending their share of the world’s largest auto market.
“Chinese brands – especially electric vehicle brands – are very strong in their own fields, while foreign brands, at least for now, are weaker, so the market share of domestic brands is increasing and surpassing international competitors,” said George Wang, managing director of Abdul Latif Jameel China.
But many international brands continue to invest as they seek to establish a long-term presence in the country. American giant General Motors has established a joint venture, SAIC-GM-Wuling, which will account for the fifth largest share of the Chinese electric vehicle market in 2023. Meanwhile, Abdul Latif Jameel has a long-standing partnership with Toyota, with plans announced in 2023 to develop electric vehicle technology in China. Abdul Latif Jameel Motors, a subsidiary of the billion-dollar conglomerate of the same name, has worked with Toyota in China for more than 25 years, and now operates in eight locations in four different provinces in the country.
Chinese car brands about to open for sale in Vietnam
In the second half of 2024, companies such as GAC, Aion, Chery (Omoda, Jaecoo), and BYD will sell their first products, including gasoline and pure electric vehicles, to Vietnamese customers. seventy three
BYD Dolphin - pure electric hatchback for Vietnamese customers
Dolphin imported from China, range 405 km per charge, motor capacity 94 horsepower. 138
Aion electric car series to be sold in Vietnam
The Aion models about to be launched in Vietnam include the ES sedan segment, Y Plus and Hyper HT CUV segment, opening for sale as early as June. 89
BYD Seal - electric sports sedan launched to Vietnamese customers
BYD Seal Performance version can accelerate from 0-100 km/h in 3.8 seconds, with a travel distance of 460-520 km. 77
BYD Atto 3 - B+ electric crossover welcomes Vietnamese customers
Atto 3 imported from China, positioned in the B+ crossover (CUV) segment, with a range of 410-480 km per charge. 108
Website of Vietnam Union of Science and Technology Associations
License number: 169 / GP-TTĐT, dated October 31, 2017
Head of Editorial Department: VI VU
The Vietnam Union system was founded with 15 members. Currently, that number has risen to 148, including 86 national industry associations and 63 local associations. In addition, in the system of the Vietnam Union, there are more than 500 scientific and technological research units established under Decree 81 (now Decree 08); over 200 newspapers, magazines, electronic newspapers, newsletters, specialties, electronic news sites.