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Investing for change: China’s world-leading electric vehicle industry
5 min read 14 Aug 25
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As many countries attempt to phase out fossil fuels, electric vehicles (EVs) have become ubiquitous – and China is leading the way. Sitting at the intersection of technology, sustainability, and global growth, the Chinese EV sector is an emblem of China’s global ambitions.
Electric vehicles (EVs) have come a long way since the first battery-powered carriages appeared over a century ago1. Today, powered by lithium and cobalt, EVs are faster, more affordable, and increasingly high-tech – with major gains in range, speed, and smart features.
What began as a niche innovation has become a global industry – and China is leading the charge. In 2024, it produced over 10 million EVs, accounting for more than 75% of global output and topping global production and sales for the tenth consecutive year2,3 .
Electrification with Chinese characteristics
Even with US tariffs on Chinese EVs rising to 100% in late 2024, China continues to dominate the EV market and value chain. While Chinese automakers have largely bypassed the US market, domestic demand and rapid expansion in developed and emerging markets continue to fuel growth4,5.
“China’s EV expansion is not just commercial; it’s also strategic. By exporting EVs to Europe, Latin America, Southeast Asia, and Africa, China is building economic influence and soft power.”
China’s edge? Scale. Despite decades of joint ventures with Western automakers since the 1980s, no Chinese brand ever achieved global success with internal combustion engine (ICE) vehicles. Without a legacy autos industry to protect, China embraced EVs early and unambiguously – and leapfrogged the rest of the world to produce EVs at scale.
In 2025, EVs are expected to outsell ICE vehicles in China for the first time6. Meanwhile, Chinese brands are going global: this year, 12 Chinese EV brands – many already active in Europe – are expected to launch in the UK alone, including Nio, XPeng and Lynk & Co7.
Now that EVs are mainstream in China, automakers are doubling down on innovation – from advanced driver-assistance systems to AI-powered smart cabins. As a result, Chinese EV makers are emerging as the most formidable challengers to legacy automakers in Europe, the US, Japan, and Korea8.
In fact, as Chinese EV makers surge ahead, foreign automakers are losing ground in the world’s largest auto market. In 2025, the market share of foreign brands in China fell to just 31%, down from 35% in 2024 and a dramatic drop from 64% in 20209.
This shift reflects not only the strength of local brands but also the intensifying price war in China’s auto sector. Led by market leader BYD, automakers are slashing prices – in some cases by up to 30% – and upping the ante by offering features like advanced driver-assistance systems in their baseline model and at no extra cost. These aggressive tactics are reshaping consumer expectations of personal vehicles, further pressuring foreign competitors.
Why China leads in EVs
China’s scale advantage encompasses more than just production capacity. The EV industry has also benefitted from the combination of a sizeable consumer market, generous government incentives for consumers and producers alike, and a highly developed supply chain.
“If Chinese brands succeed in reshaping consumer expectations abroad as they have done at home, they could emerge as the next generation of global automotive leaders - and key players in the future of transport.”
China dominates battery production and controls much of the global supply of lithium, cobalt, and rare earth minerals. With an established and mature manufacturing system, China has achieved a high degree of vertical integration, doing nearly everything from raw materials to final assembly locally – and enjoying a significant edge in cost efficiency, speed and resilience.
Why investors should pay attention
For long-term investors, China’s EV sector may offer great promise. The country’s national ambitions and climate goals align with the industry’s potential to advance clean mobility. With a population of over 1.4 billion, China’s domestic EV market alone presents a massive opportunity, driven by rising incomes and growing demand for smart, sustainable vehicles10.
Chinese EV companies are also investing heavily in research and development underpinning battery innovation and autonomous driving, aiming to lead the next wave of automotive technology. If Chinese brands succeed in reshaping consumer expectations abroad as they have done at home, they could emerge as the next generation of global automotive leaders – and key players in the future of transport.
China’s EV expansion is not just commercial; it’s also strategic. By exporting EVs to Europe, Latin America, Southeast Asia, and Africa, China is building economic influence and soft power through infrastructure, supply chain development, and brand equity. Even for investors who stay on the sidelines, China’s dominant and growing presence in electric vehicles reflects shifts in global trade and a challenge to Western dominance in the automotive and energy sectors.
Through selective exposure to Chinese EV leaders, investors can tap into a dynamic sector at the intersection of technology, sustainability, and global growth. With strategic foresight, this could be a powerful engine of portfolio differentiation and long-term returns.
1 US Department of Energy, The History of the Electric Car” (energy.gov), September 2014.
2 Yicai, “China's NEV Industry Ranks First Globally by Production, Sales for 10th Straight Year”, (yicaiglobal.com), January 2025.
3 FT, “Which Chinese EV should you buy?”, (ft.com),17 February 2025.
4 Clean Technica, “53% EV Share in China! — June 2025 Sales Report”, (cleantechnica.com), June 2025.
5 Electrek, “China breaks records as global EV sales hit 7.2 million in 2025”, (electrek.co), June 2025.
6 FT, “Which Chinese EV should you buy?”, (ft.com) 17 February 2025.
7 FT, “Which Chinese EV should you buy?”, (ft.com) 17 February 2025.
8 Jato Dynamics, “Closing the gap: the progress towards affordable EVs and the rising competition from China”, (jato.com), January 2025.
9 AutoMobility, “State of China’s Auto Market – May 2025,”(automobility.io), May 2025
10 Worldometers, “China Population (live)”, (worldometers.info), as of July 2025.
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