Annabelle Liang & Nick Marsh
Business reporter & Transport correspondent
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Almost half of all cars sold in China last year were electric
“I drive an electric vehicle because I am poor,” says Lu Yunfeng, a private hire driver, who is at a charging station on the outskirts of Guangzhou in the south of China.
Standing nearby, Sun Jingguo agrees. “The cost of driving a petrol car is too expensive. I save money driving an electric vehicle,” he says.
“Also, it protects the environment,” he adds, leaning against his white Beijing U7 model.
It’s the kind of conversation climate campaigners dream of hearing. In many countries, electric vehicles (EVs) are considered luxury purchases.
But here in China – where almost half of all cars sold last year were electric – it’s a banal reality.
‘King of the hill’
At the beginning of the century, China’s leadership laid out plans to dominate the technologies of the future. Once a nation of bicycles China is now the world’s leader in EVs.
For Guangzhou’s more than 18 million people, the roar of the rush hour has become a hum.
“When it comes to EVs, China is 10 years ahead and 10 times better than any other country,” says auto sector analyst Michael Dunne.
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Chinese EV makers are looking to sell more cars overseas
China’s BYD now leads the global EV market, after overtaking US rival Tesla earlier this year.
BYD’s sales have been helped by a vast domestic market of more than 1.4 billion people and it is now looking to sell more cars overseas. So too are a raft of other Chinese start-ups that make affordable EVs for the mass market.
So how did China build this lead, and can it be caught?
The master plan
In tracing the origins of China’s EV dominance, analysts often credit Wan Gang – a German-trained engineer who became China’s minister of trade and science in 2007.
“He looked around and said, ‘Good news: we are now the largest car market in the world. Bad news: on the streets of Beijing, Shanghai, Guangzhou all I see is foreign brands’,” says Mr Dunne.
At the time, Chinese brands simply couldn’t compete with the European, American and Japanese car makers for quality and prestige. These companies had an unassailable head start when it came to producing petrol or diesel-powered cars.
But China did have ample resources, a skilled labour force and an ecosystem of suppliers in the motor industry. So Mr Wan decided to “change the game and flip the script by moving to electrics”, according to Mr Dunne.
This was the master plan.
Even though the Chinese government had included EVs in its five-year economic blueprint as early as 2001, it wasn’t until the 2010s that it started to provide vast amounts of subsidies to grow the industry.
China, unlike Western democracies, has the capacity to mobilise huge swathes of its economy over many years towards its aims.
The country’s mammoth infrastructure projects and dominance in manufacturing are a testament to this.
A US think tank, the Center for Strategic and International Studies (CSIS), estimates that from 2009 to the end of 2023, Beijing spent around $231bn (£172bn) developing the EV industry.
From consumers and carmakers to electricity providers and battery suppliers, everyone in China is entitled to money and assistance when it comes to EVs.
It encouraged BYD, for example, to switch from making smartphone batteries to focusing on producing EVs.
Ningde-based CATL – which supplies firms such as Tesla, Volkswagen and Ford – was founded in 2011 and now produces a third of all the batteries used for EVs worldwide.
This combination of long-term planning and government funding also allowed China to dominate critical supply chains in battery production.
It has helped build the world’s largest public charging network with stations concentrated in big cities, which put drivers just minutes away from the nearest charger.
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China has the world’s biggest EV charging network
“If you want to manufacture a battery to put into an electric car today, all roads go through China,” says Mr Dunne.
Some refer to this as “state capitalism”. Western countries call it unfair business practice.
Chinese EV executives insist all companies, domestic or foreign, have access to the same resources.
As a result, they argue, China now has a thriving EV start-up sector, driven by fierce competition and a culture of innovation.
“The Chinese government is doing the same thing you see in Europe and in the US – providing policy support, consumer encouragement and infrastructure,” Brian Gu, president of EV maker XPeng, tells the BBC.
“But I think China has done it consistently and in a way that really fosters the most competitive landscape that there is. There’s no favouritism to anybody,” he adds.
Annabelle Liang
EVs are everywhere in today’s Guangzhou, identifiable by their green number plates
XPeng is one of the “Chinese champions”, as Mr Gu puts it, driving the industry forward. Barely a decade old and yet to turn a profit, the start-up is already in the world’s top 10 EV producers.
The company has attracted some of China’s top young graduates to its headquarters in Guangzhou, where casually dressed staff sip flat whites and internet streamers sell cars live in the showroom.
A brightly coloured slide taking employees from the top to the ground floor would seem more at home in Silicon Valley than China’s industrial heartland.
Despite the relaxed atmosphere, Mr Gu says the pressure to offer consumers better cars at lower prices is “immense”.
The BBC was invited on a test drive of XPeng’s Mona Max, which has just gone on sale in China for around $20,000.
For this price you get self-driving capability, voice activation, lie-flat beds, film and music streaming. Young Chinese graduates, we’re told, see all these as standard features for a first car purchase.
“The new generation of EV makers… look at cars as a different animal,” says David Li, the co-founder and chief executive of Hesai, which makes the Lidar sensing technology used in many self-driving cars.
‘An EV makes sense for me’
Young Chinese consumers are certainly attracted to top-of-the-range technology, but a huge amount of government spending goes towards making EVs financially attractive, according to the CSIS study.
Members of the public receive subsidies for trading in their non-electric car for an EV as well as tax exemptions and subsidised rates at public charging stations.
These perks drove Mr Lu to go electric two years ago. He used to pay 200 yuan ($27.84; £20.72) to fill up his car for 400km (248 miles) of driving. It now costs him a quarter of that.
Annabelle Liang
Lu Yunfeng is one of millions of EV owners in China
People in China also normally pay thousands for their vehicle registration plate – sometimes more than the cost of the car itself – as part of government efforts to limit congestion and pollution. Mr Lu now gets his green one for free.
“The rich drive petrol cars because they have unlimited resources,” Mr Lu says. “An EV just makes sense for me.”
Another proud EV owner in Shanghai, who wanted to use her English name Daisy, says that rather than charge her vehicle at a station, she changes her car’s battery at one of the city’s many automated swapping stations provided by EV maker Nio.
In under three minutes, machines replace her flat battery with a fully charged one. It’s state of the art technology for less than the price of a tank of fuel.
The road ahead
The government subsidies at the heart of China’s EV growth are seen as unfair by countries looking to protect their car industries.
The US, Canada and the European Union have all imposed substantial import taxes on Chinese EVs.
However, the UK says it’s not planning to follow suit – making it an attractive market for firms like XPeng, which started delivering its G6 model to British consumers in March, and BYD, which launched its Dolphin Surf model this month in the UK, and is available for as little as $26,100.
This should be music to the ears of Western governments that enthusiastically back the transition to EVs, which the United Nations calls “pivotal” to avert climate disaster.
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A combination of long-term planning and government funding has allowed China to dominate EV supply chains
Several Western countries, including the UK, say they will ban the sale of petrol and diesel cars by 2030. No country is better placed to help make this a reality than China.
“The Chinese are thinking about a future where they manufacture just about every single car for the world. They’re looking around saying, ‘Can anybody do it better than us?'” says Mr Dunne.
“Leaders in Detroit, Nagoya, Germany, UK, everywhere around the world, are shaking their heads. It’s a new era, and the Chinese are feeling very confident about their prospects right now.”
Despite the environmental benefits, there is still suspicion about what relying on Chinese technology could bring.
Britain’s former head of MI6, Sir Richard Dearlove, recently called Chinese EVs “computers on wheels” that can be “controlled from Beijing”.
His claim that Chinese EVs could one day immobilise British cities was dismissed by BYD’s executive vice-president Stella Li in a recent BBC interview.
“Anyone can claim anything if they lose the game. But so what?” she said.
“BYD pays for a very high standard of data security. We use local carriers for all our data. In fact we do it 10 times better than our competition.”
Nevertheless Sir Richard’s concerns echo previous national security debates surrounding Chinese technology.
This includes telecoms infrastructure maker Huawei, whose equipment was banned in several Western countries, as well as the social media app TikTok, which is prohibited on UK government devices.
But for Sun Jingguo in Guangzhou, the message is simple.
“I think the world should thank China for bringing this technology to the world,” he laughs. “I do.”
Additional reporting by Theo Leggett, international business correspondent in London.