If Western manufacturers of electric vehicles hadn’t taken notice of China’s growing presence in the market before, they certainly have now.

For a long time, China’s status as a Titan of Exports has not extended to cars, but that has quickly turned around.

As of the first quarter of this year, China has surpassed Japan as the world’s leading exporter of automobiles.

And it all comes down to China’s EV-ecosystem, which it has been developing since 2009.

Seeing a global push for controlling climate change, China shoved all of its chips in on transportation moving more towards cleaner options, like electric vehicles. They offered subsidies to customers buying EVs, as well as to those building and installing charging stations.

They have also been able to dominate the market in lithium refinement for the batteries needed for electric vehicles.

This has all contributed to the recent explosive increase in their auto exports.

The carrot of subsidies has been paired with the stick of national protectionism.

In order to qualify for their generous handouts, cars had to be all-Chinese.

China-made, with Chinese batteries. Boosting the value of companies like Contemporary Amperex Technology and BYD.

The United States has already leaned heavily on offering their own incentives to electric vehicle manufacturers, as well aggressive mandates towards automakers shifting away from gas powered vehicles.

Subsidies introduced under the Inflation Reduction Act have already attracted foreign manufacturing for parts critical to EV production, as well as other alternative energy solutions.

But it has clearly not been enough to keep China from taking control of another emerging market.

Another key factor in China’s EV export surge was European and American sanctions on Russia over the conflict in Ukraine.

Exports from China to Russia more than tripled from the first four months of 2022 to the same period in 2023, totalling $6.1 billion.

In 2022, China accounted for 35% of the world’s electric vehicle exports.

Putting On A Show

For years, China managed to fly below the radar on EVs. But that all changed in April, during the Shanghai Auto Show.

Serving as a coming-out party for China, and a wake up call for Western auto executives, the auto show revealed to the world just how far the People’s Republic has come in EVs.

Tu Le of Sino Auto Insights said of American and European representatives when they saw the fleet of new China-made EV models…

“They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”

Western manufacturers, including Tesla, have been caught flat-footed.

Already struggling with rising costs stemming from the rising price of importing Chinese controlled lithium, they now have to reckon with their shrinking market shares turning into a full-on blown lead.

With the demand (and requirements) for electric vehicles expected to increase exponentially, it will surely be a drag-out fight to wrest control from the Export Superpower.

What are your thoughts? Are China’s gains in EV exports sustainable? Is there anything Western manufacturers can do to regain control? Let us know about this, or anything at feedback@technologyprofits.com.