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- Facing a Chinese auto market dominated by foreign brands from Europe, America, and Japan, the strategy was to “change the rules of the game,” according to auto analyst Michael Dunne.
- The Chinese government included electric vehicles in its five-year plans as early as 2001, but it was really in the 2010s that massive subsidies were deployed.
- This strategy enabled the emergence of national champions like CATL, founded in 2011, which now produces a third of the world’s batteries for electric vehicles.
When Guangzhou private driver Lu Yunfeng explains that he drives electric “because he’s poor,” it perfectly captures the Chinese situation. While Americans still view electric cars as luxury items, China has made them an accessible economic reality. With nearly half of all vehicles sold being electric in 2024, the Asian giant has transformed its automotive landscape in less than two decades—and for good reason: electric cars are much cheaper to buy and operate.
This remarkable transformation didn’t happen by chance. It stems from a methodical government strategy, massive investments, and a pragmatic approach that prioritizes affordability over premium branding. To understand this phenomenon, we need to analyze how manufacturers like BYD overtook Tesla in the global electric vehicle market.
A long-term state strategy
China’s electric rise began in the early 2000s, driven by Wan Gang, a German-trained engineer who became Minister of Commerce and Science in 2007. Facing a Chinese auto market dominated by foreign brands from Europe, America, and Japan, the strategy was to “change the rules of the game,” according to auto analyst Michael Dunne.
Rather than trying to catch up on decades of technological lag in combustion engines, China bet on electrification. The Chinese government included electric vehicles in its five-year plans as early as 2001, but it was really in the 2010s that massive subsidies were deployed. According to the Center for Strategic and International Studies, Beijing invested approximately $231 billion between 2009 and 2023 to develop this sector.
A fully subsidized industrial ecosystem
The Chinese approach stands out for its comprehensiveness. Subsidies cover the entire value chain: manufacturers, battery suppliers, charging operators, and end consumers. This strategy enabled the emergence of national champions like CATL, founded in 2011, which now produces a third of the world’s batteries for electric vehicles.
The financial benefits for consumers are substantial. Lu Yunfeng used to spend the equivalent of $30 for 250 miles of range with his gas vehicle, compared to just $7.50 today with his electric car. Owners also benefit from free license plates, tax exemptions, and preferential rates at public charging stations.
These advantages include direct purchase subsidies, gas vehicle trade-in programs, free license plates (normally costing thousands of dollars), tax exemptions on electric vehicles, preferential rates at public charging stations, and privileged access to city centers for vehicles with green plates.
Innovation making technology affordable
Chinese manufacturers like XPeng offer vehicles with advanced technologies at unbeatable prices. XPeng’s Mona Max model, sold for $20,000, integrates autonomous driving, voice activation, convertible seats into beds, and streaming services. Features that young Chinese consumers consider standard for a first car purchase.
Chinese charging infrastructure represents the largest public network worldwide, with particularly high density in major cities. Some manufacturers like Nio have developed automated battery swap stations, allowing a complete replacement in less than three minutes at a cost lower than filling up with gas.
International expansion facing trade resistance
Chinese manufacturers are now targeting exports, with BYD surpassing Tesla in global volumes and XPeng delivering its G6 models to the UK since last March. BYD offers its Dolphin Surf model in the British market starting at $26,100, a positioning that worries traditional manufacturers.
The United States, Canada, and the European Union have responded by imposing substantial tariffs on Chinese imports, considering government subsidies as unfair competition. The UK is an exception by keeping its doors open to these vehicles, which could accelerate the adoption of Chinese technologies in Europe.
Geopolitical challenges of technological dependence
The Chinese expansion raises security concerns. Sir Richard Dearlove, former director of MI6, describes Chinese electric vehicles as “computers on wheels” potentially controllable from Beijing. Stella Li, Executive Vice President of BYD, refutes these accusations by highlighting the high data security standards applied by her company.
These concerns echo debates around Huawei in telecommunications or TikTok in social networks. For Western governments committed to energy transition with goals to ban combustion vehicles by 2030, the dilemma is complex: accept Chinese technological dependence or slow down their climate ambitions. Chinese consumers like Sun Jingguo in Guangzhou don’t have these qualms: “The world should thank China for bringing this technology,” he says with a smile.
