Honest John

The Chinese EV Revolution

It wasn’t too long ago that Chinese car brands were barely registered outside their home market. Early attempts to go global were met with skepticism - often dismissed as copycats or, at best, cheap alternatives to Western and Japanese automakers. 

But fast-forward to 2025, and China isn’t just a player in the electric vehicle (EV) market. It’s rewriting the rules.

Led by brands like BYD, Nio, and XPeng, Chinese EVs have surged from relative obscurity to dominate the global stage. China is now the world's largest EV producer and exporter, with homegrown brands outselling legacy giants in key markets and forcing those brands to rethink their strategies.

But how and why has the Chinese EV revolution taken the world by storm? And with Western tariffs threatening to slow their momentum, can Chinese automakers maintain their breakneck growth?

Key Statistics

  • Global EV sales reached 17.1 million units in 2024, with China accounting for 11 million (approximately 65%) of these sales.
  • China's EV market is projected to reach 12 million units in 2025, surpassing traditional combustion engine vehicle sales (estimated at under 11 million) for the first time.
  • BYD delivered nearly 4.3 million electric vehicles in 2024, becoming China's largest automaker.
  • China's EV market penetration rate reached 52.3% in November 2024, up from 36% in July 2023.
  • Foreign brands’ market share in China dropped to 37% in 2024 from 64% in 2020.
  • China's new energy vehicle (NEV) penetration is projected to increase from 49% to 58% in 2025.
  • In China's 2024 growth, PHEVs saw 81% growth compared to BEV growth of 19%.
  • BYD commands over one-third of new EV sales in China, with more than 40 models across four EV brands.
  • China's projected EV market revenue is expected to reach US$377.9 billion in 2025.

Key Chinese EV Manufacturers

BYD (Build Your Dreams)

BYD is the world's largest NEV (new energy vehicle) manufacturer with 4.3 million sales in 2024. As of 2024, BYD's annual vehicle production capacity in China has reached 5.82 million vehicles. The company operates multiple plants across China, with its largest facility in Hefei having a capacity of 1.32 million vehicles annually. 

BYD has established more than 30 industrial parks across 6 continents. It’s present in more than 70 countries.

Flagship Models:

  • Han EV (business sedan)
  • Qin Plus EV (urban commuter)
  • Dolphin (compact)

SAIC Motor (MG)

SAIC Motor Corporation Limited is China's largest state-owned car manufacturer, headquartered in Shanghai. It ranks 93rd on the Fortune Global 500 list with revenue of $105.2 billion in 2023.

In Europe, SAIC operates primarily under the MG brand, which it acquired in 2007. During the first half of 2023, MG registered 104,300 vehicles in Europe, achieving a 128% growth compared to the previous year.

Flagship Models:

  • MG4 EV (electric hatchback)
  • MG3 HEV (new hybrid)
  • MG Cyberster (roadster)

Li Auto

Founded in 2015, Li Auto is a relatively new player in the EV market. 2024 vehicle deliveries were expected to be in the range of 501,812-511,812, an impressive feat for such a new company.

In 2024, Li Auto targeted expansion into Middle Eastern markets including the UAE and Saudi Arabia. The company has set ambitious global sales targets - 1.6 million vehicles by 2025.

Flagship Models:

  • Li L9 (premium SUV)
  • Li L8 and L7 (mid-range models)

Why Are Chinese EVs Dominating?

Policy Support

If there’s one reason China’s EV industry has left the rest of the world playing catch-up, it’s policy. While many Western governments dithered over incentives and infrastructure, China treated electric vehicles as a strategic priority - backing its industry with billions in funding, tax breaks, and a regulatory framework designed to promote EV adoption.

Between 2009 and 2023, China poured over $230 billion into subsidies and tax incentives, making EVs more accessible to consumers and giving manufacturers the financial firepower to scale up production. 

Buyers benefitted from direct rebates, a 10% sales tax exemption, and long-term incentives to switch from petrol to electric. And Beijing isn’t stopping anytime soon - new tax exemptions introduced in 2023 offer up to RMB30,000 ($4,170) for purchases in 2024-2025, tapering to RMB15,000 ($2,085) for 2026-2027.

EVs are incredibly popular with Chinese drivers - BYD alone accounts for around 10% of the total number of cars (including ICE-powered vehicles) sold in China in 2024.

Policy support has delivered a domestic market that buys more EVs than the rest of the world combined and a rapidly growing export industry that’s challenging legacy automakers on their own turf.

Cars are Becoming More Like Consumer Electronics 

And that gives China a distinct advantage over its Western counterparts.

Building a good internal combustion engine is difficult - it’s one of the main reasons why German carmakers are so renowned. However, NEVs have no engines, no transmissions, and far fewer moving parts. The focus has shifted from mechanical engineering to something China knows better than anyone: batteries.

Batteries are the most critical component in an EV, accounting for 30-40% of the total manufacturing costs. Success in the EV market depends on battery chemistry, power management, and software integration - areas where Chinese manufacturers have a massive head start.

Over 65% of high-impact research publications in electric batteries are written by Chinese institutions (the US accounts for around 12%). In 2020, 26.9% of patents in the field of electric propulsion were owned by Chinese companies.

BYD exemplifies this advantage. Originally a mobile phone battery supplier, BYD used its expertise to expand into automotive batteries. BYD today accounts for over 17% of the global market share for EV batteries, second only to CATL - another Chinese brand.

Meanwhile, traditional Western automakers are scrambling to keep up, often relying on third-party suppliers (like BYD and CATL) for battery technology and facing production bottlenecks as they transition to electric. 

Cars now are as much about software and battery chemistry as they are about driving dynamics. China’s industrial DNA gives it a clear advantage.

Consumer Appeal

It’s not just policy and tech that are driving China’s EV boom - it’s the simple fact that these cars often offer more for less.

In the past year alone, the number of Chinese EVs available for under £30,000 has jumped from 9 to 29 models, giving budget-conscious buyers more options than ever. At the same time, the price gap between EVs and traditional petrol cars has shrunk from 35% to 24%, representing an average £3,600 reduction - a major factor in shifting consumer attitudes.

It’s working. Four in ten UK consumers are now willing to consider a Chinese car brand, and with brands like BYD, MG, and Ora rapidly expanding across Europe, that number is only going to rise.

Cost Advantages: How China Undercuts Global Rivals

Production Efficiency

China’s raw manufacturing efficiency allows Chinese automakers to build cars faster and cheaper than their Western competitors. Cheaper production means lower costs for drivers, even when accounting for tariffs.

Chinese EV manufacturing has a built-in cost advantage of around 20% compared to the US and Europe, so EVs produced in China can undercut their Western counterparts by thousands.

Manufacturing a BYD Seal sedan in Eastern Europe adds approximately $500 in labour costs per car, while shifting production to Germany would quadruple that amount.

Then there’s paying for parts. Western automakers rely on a web of suppliers for key components, including Chinese manufacturers. Some Chinese companies, like BYD, develop their own batteries and components.

In fact, BYD makes almost everything in-house - from batteries and semiconductors to transmissions, axles, and advanced driver assistance systems (ADAS). Even wiring harnesses, braking systems, and body control modules are built internally, with only tyres and windows fully outsourced.

This level of control keeps costs low and limits supply chain risks, allowing Chinese manufacturers to ramp up production faster and respond to market shifts more effectively than their Western rivals. 

BYD is launching multiple models for the European market in 2025, like the Sealion 7 and Atto 2. In total, BYD has launched 9 models in Europe. Compare that to Tesla, whose latest ‘Cybercab’ doesn’t have a concrete release date, and the last model to go into production (the Model Y) was in 2020.

Scale & Subsidies

China’s policymakers in the early 2000s recognised that competing with established ICE brands was futile, despite growing demand for vehicles in China. Instead, they focused on innovating with NEVs.

  • Between 2009-2023, an estimated $230 billion of financial support was given to Chinese EV makers.
  • Aid increased in recent years - from an average of $7.59 billion a year from 2009-2017 to $30.1 billion in 2021 and $45.2 billion in 2023.
  • Chinese battery manufacturer CATL received $809.2 million in subsidies in 2023 - CATL supplied 36.8% of batteries for EVs globally that year.
  • In 2023, the Chinese Government announced a package worth $72.3 billion over 4 years to provide tax breaks for NEVs.

Innovation

The global demand for EV batteries is expected to increase tenfold by 2030. And the main battery suppliers are Chinese brands.

CATL and BYD dominate the global battery market. CATL holds a staggering 37.9% market share (up from 36.8% in 2023), while BYD has surged to 17.2% (up from 15.9% in 2023). These companies don’t just supply Chinese EV makers - they’re the go-to battery providers for brands like Tesla, BMW, and Toyota.

Why? Price, efficiency, range, raw performance - Chinese brands are experts in getting the most out of lithium-ion cells. Innovations like CATL’s Shenxing Plus battery - which can deliver 600 km (250 miles) of range in just 10 minutes - are already rolling out in mass-market vehicles, putting pressure on Western automakers to catch up.

The Western Response

In a bid to protect domestic manufacturers, the EU implemented new tariffs on October 30, 2024, hitting Chinese automakers with steep additional duties:

  • SAIC (MG): 35.3%
  • BYD: 17.0%
  • Geely: 18.8%
  • Tesla (China-made models): 7.8%

These tariffs come on top of the existing 10% standard EU import duty, effectively making Chinese EVs up to 45% more expensive for European buyers.

Meanwhile, the US has taken an even more aggressive stance. In 2024, tariffs on Chinese EVs skyrocketed from 25% to 100%, effectively doubling the price of Chinese-made cars in the US.

In addition, tariffs on battery materials were raised to 25%, alongside new 25% duties on critical minerals and restrictions on semiconductor imports.

And with Donald Trump in power? Things could escalate further. His campaign included a proposed 60% blanket tariff on all Chinese imports, along with 10-20% tariffs on all foreign goods and a 200% tariff on Mexico-made vehicles (aimed at curbing Chinese automakers setting up production south of the border), could dramatically reshape global EV trade.

As of March 2025, the Trump administration has introduced a 25% tariff against goods from Mexico, and a 20% tariff on goods from China. At the end of March, Trump announced a 25% tariff on all vehicle imports, potentially affecting any car sold in the US that wasn’t built in the country.

Industry Backlash

Not everyone is on board with these protectionist policies. In Europe, automakers like BMW and Tesla are suing the EU over its tariffs, arguing that the measures will hurt consumers and disrupt supply chains. Volkswagen has publicly slammed the tariffs, calling them "the wrong approach," while the powerful German auto sector has lobbied hard against them.

Even outside the EU auto sector, opinions are divided. While Germany opposes the tariffs due to its heavy dependence on China for exports, countries like France, Greece, Italy, and Poland have backed the measures, arguing that European automakers need protection from cheap Chinese imports.

But Chinese Manufacturers Are Adapting

Rather than backing down, Chinese automakers are adjusting their strategies to bypass tariffs and maintain market presence:

  • SAIC (MG) pledged to keep its prices unchanged for 2024 deliveries in France and italy, absorbing the extra costs rather than passing them on to consumers.
  • Companies are looking to shift production to Europe, with BYD, NIO, and Geely exploring new factories to avoid import duties.
  • Hybrid models are gaining traction, as they often face fewer restrictions than fully electric vehicles.

Global Market Impact

For the second consecutive year, China is the world’s largest auto exporter. In the first 10 months of 2024 alone, the country shipped 4.1 million passenger vehicles abroad, a 24% year-on-year increase. Crucially, 25% of these exports were New Energy Vehicles (NEVs), solidifying China’s role as the leading supplier of affordable EVs worldwide.

The UK

  • MG sold over 68,000 vehicles in the UK in 2024.
  • Chinese-branded models could account for up to 25% of Britain's electric fleet by 2030.
  • The number of Chinese sub-£30,000 EV options in UK showrooms increased from 9 to 29 at the start of 2025.

Europe

In 2019, Chinese EVs held just 0.5% of the market - by 2023, that had jumped to 8.2%, and it’s only going up:

  • Estimated 11% market share in 2024.
  • Expected to hit 20% by 2027.
  • Estimated 3.3 million units sold in 2025

With brands like BYD, MG, and Nio aggressively expanding their European operations, the continent is quickly becoming China’s most valuable export market outside of Asia.

United States

Unlike Europe and emerging markets, the US remains a more complicated battleground. Chinese EVs face uncertain tax credits, high interest rates, and aggressive tariffs, making widespread adoption more difficult.

However, despite the hurdles, the US EV market is still projected to grow by 16% in 2025 - a sign that demand remains strong, even as political and economic pressures create uncertainty.

The big contest is between China’s BYD and the US’ Tesla. Q4 2024 saw BYD overtake Tesla as the world’s largest electric car company, delivering 525,409 EVs globally to Tesla’s 484,507.

Emerging Markets

China isn’t just targeting Europe and North America—it’s dominating emerging markets, where Japanese and American automakers have been slow to transition to EVs.

With demand booming and local competition lagging, China is poised to dominate the EV revolution across emerging economies.

2025 & Beyond Outlook

The transition to electric vehicles is accelerating. In 2025, global EV sales are expected to rise by 20%, reaching 20.4 million units, up from 17 million in 2024. 

In the UK, predictions suggest EVs will account for 23% of all new car sales, up from 19.6% this year.

Sources

European Commission, Center for Strategic & International Studies (CSIS), Fleet News, Information Technology & Innovation Foundation (ITIF), Transport and Energy, Al Jazeera, CNEV Post, Tech Wire Asia, Statista, MIT Technology Review, SMMT, Auto Trader, the Telegraph, Campaign Asia, BYD, China Daily, SCMP, China Briefing, Car Expert, Center for Strategic and International Studies