Is China winning the electric car race?

China now sells more electric cars than conventional ones within its territory. Western countries seem determined to stop them from crossing their borders. Why?

Electric car charging piles
(Image credit: Costfoto/NurPhoto via Getty Images)

China passed a milestone in the green revolution last month when sales of electric vehicles (EVs) and hybrids surpassed those of internal combustion engine cars for the first time. Retail sales of “new-energy” cars – the umbrella term used in China for EVs and hybrids – made up 51.1% of all sales in July, a giant leap from just 7% three years ago. The landmark follows a continuing surge in the popularity of EVs in China over the past year, even as growth in other key markets, including the US and Europe, has slowed. The number of “new-energy” cars sold last month in China, 878,000, was 37% higher year on year; sales of conventional cars fell 26% to 840,000.

The global electric car market 

Why is the electric car market booming in China?

Marketing of EVs in China rarely, if ever, emphasises the environmental benefits, says Helen Davidson in The Guardian. Instead, it’s all about cost, and the range of available products, from compact city runarounds to luxury sports cars and large hybrid SUVs, powered by CATL batteries and Huawei technology. “EVs happen to be one rare area where China seems to be leading the world – high quality and low price, not to mention dizzying variety,” says Tinglong Dai, a business professor at Johns Hopkins University. “This is one of the incredible opportunities for China to dominate a highly respected marketplace. And it’s also in line with broad environmental goals in the West.” Yes, the Chinese government is motivated in part by climate and economic factors, but far more importantly the long-term investment that is now paying off was “more of a geopolitical move – a way to get to the top of the food chain of a high-end, high-status industry”.

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What about exports?

They are growing fast, especially in developing markets, and Chinese companies are also investing heavily in local manufacturing and supply-chain capabilities (including batteries and raw materials) in countries such as Indonesia and Brazil. However, China faces serious headwinds in the existing biggest non-Chinese markets, the US and Europe, both of which have ramped up protectionist tariffs on Chinese cars, on the grounds that unfair state subsidies are distorting competition and making them unfairly cheap. The US, where China has achieved little market penetration, recently raised its import duty on Chinese EVs from 25% to an intentionally crippling 100%. It was part of a package of measures including increasing levies from 7.5% to 25% on lithium batteries, from zero to 25% on critical minerals, from 25% to 50% on solar cells and from 25% to 50% on semiconductors. In Europe, Chinese EVs are a far more common sight. According to EU data, the market share of EVs imported from China (including those made under joint ventures with European firms) surged from 4% in 2020 to 25% by September 2023, making China’s EV exports to Europe last year worth about €10 billion. Brussels, too, has announced punitive new tariffs.

What is the EU tariff on Chinese EVs?

Up to 48%. Brussels already imposes a 10% tariff on Chinese EVs. It will now impose additional duties of 17%-38%, depending on the extent to which individual manufacturers complied with an EU anti-subsidy investigation. The biggest exporters, including BYD, the world’s largest EV maker, will pay additional tariffs of 17%-20%. European brands such as Mercedes and Renault, which export EVs made in China, will pay 21%. Companies deemed not to have co-operated, including Shanghai-based SAIC, will pay 38%. The state-owned firm dominates the lower end of the European EV market through the MG brand. The charges came into effect last month, but are currently provisional while the investigation into Chinese state support for the country’s EV makers continues. The tariffs are strongly backed by France but opposed by Germany, which fears a costly trade war with China. Beijing has lodged complaints with the World Trade Organisation.

Is the EU’s action justified?

No, says the Financial Times. EU governments – like others across the developed world – have a dilemma. They have pledged to decarbonise their economies within decades, but they are “also moving to limit imports of Chinese green tech, without which decarbonisation will take more time and money – if it can be achieved at all”. At some point they will need to choose between their climate goals and their protectionism, and “it would be better for everyone if it is protectionism that has to give”. Europe’s problem is “not too many Chinese imports but rather too few”. It is “heartening to see the UK refraining from joining the tariff wars”.


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Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.