Can China continue to maintain its leading position in the electric vehicle sector?

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：Unsplash

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Can China continue to maintain its price advantage?

Although Chinese electric vehicles are not yet common on roads in Europe and the United States, they are increasingly attracting attention. In the U.S., Germany, the UK, and France, more than half of respondents said they’re familiar with at least one Chinese brand—such as BYD, Leap Motor, and Nio. Moreover, respondents unanimously indicated that they would consider purchasing a Chinese EV if its price were 20% lower than that of comparable non-Chinese models.

Chinese electric vehicles are priced at the equivalent of $34,400, significantly lower than the U.S. average of $55,242. Several factors contribute to this price gap. Chinese automakers enjoy a clear cost advantage, driven by lower labor costs, larger industry scale, robust government subsidies, and more competitive battery prices—since many of the world’s electric vehicle batteries and components are sourced from China.

However, to maintain this advantage, there are still some factors beyond China's control. For instance, Chinese-made cars currently face a hefty 27.5% tariff in the U.S., and these tariffs could even rise significantly further down the line.

However, China has already demonstrated that it can develop reliable car exports—even in the face of trade barriers—and in 2023 became the world’s largest auto-exporting nation (largely driven by exports of internal-combustion-engine vehicles to markets like Russia and Mexico). Now, all it needs is to find the right approach to replicate its earlier success in mature markets for electric vehicles.

Expertly crafted, cutting-edge design

Chinese brands have won market favor thanks to their superior exterior and interior designs, user-experience-enhancing components, and cutting-edge technologies—including safety and connectivity features—enabling them to rise from their long-standing position of being behind in the domestic market (the world’s largest) to now holding more than half of the market share.

The global electric vehicle market also seems to be on the cusp of a similar transformation. While Tesla currently dominates the global EV market, other American and European brands have been slow to keep pace—possibly due to high EV price tags, a lack of compelling features and designs, limited supply, or perhaps a combination of all these factors.

Chinese brands approach car-making differently from most Western automakers. While established Western brands typically place immense emphasis on features that are subtle yet critical to the driving experience—such as handling, control, or even vibration—Chinese brands prioritize creating a direct, sensory-rich experience that resonates deeply with drivers. This philosophy has also carried over into the electric vehicle sector. In the coming years, China’s challenge will be how to sustain this competitive edge in an industry where global rivals boast significantly stronger R&D funding.

Establish a market full of promising opportunities

The automotive industry is still in the early stages of the electric vehicle revolution. Of the roughly 90 million light vehicles expected to be sold in 2024, only 17 million will be electric cars—and most of these are projected to be sold in China.

The key to boosting global demand lies in addressing the barriers potential car buyers face when considering electric vehicles—such as battery range, vehicle costs, and, most importantly, concerns about charging infrastructure.

Our research on electric vehicles reveals that a key factor driving demand for EVs in China is consumers' strong confidence in the country's rapid and proactive response to these challenges. In contrast, Western respondents clearly lack similar levels of confidence. For instance, 43% of U.S. consumers who are considering buying an EV say they don’t have enough charging infrastructure at home or work—whereas in China, this concern is nearly one-third lower, thanks to the country’s extensive network of millions of publicly available charging stations. Similar challenges are also being faced in other regions around the world.

The electric vehicle revolution will create numerous opportunities for players around the world, but every winner emerging could also mean that some participants may lose their competitive edge. If Chinese EV manufacturers aim to keep advancing on the global stage, they’ll need to work hard to maintain their advantages while simultaneously addressing the many challenges that still lie ahead.

The above content represents the author's personal views only.This article is translated from the World Economic Forum's Agenda blog; the Chinese version is for reference purposes only.Feel free to share this in your WeChat Moments; please leave a comment below if you'd like to republish.

Translated by: Sun Qian | Edited by: Wang Can

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