If you’ve been to a car expo lately, you’ve probably seen it firsthand: Chinese EVs have evolved from being a curiosity to a force to be reckoned with. And with their sleek designs, competitive pricing, and tech-loaded features, they’re proving that the future of electric cars might not belong to the brands we once expected.
Once the undisputed leader of the EV world, Tesla is now slipping – and hard. Sales took a hit across the US, China, and major European markets in February this year, and its stock price has nosedived nearly 50% from its mid-December peak. Part of that slump is directly tied to controversy (consider that Tesla sales in Germany have collapsed by 76% since Elon Musk’s famous “Roman salute” in January). But beyond the dodgy politics lies a bigger problem: an Eastern competitor decades in the making.
With rivals gaining ground and sentiment shifting, Tesla’s reign isn’t looking as secure as it once was. In China, where local giant BYD continues its unstoppable rise, Tesla’s numbers fell by 49%. Beyond their homeground advantage, Chinese automakers are also dominating emerging markets (hello, South Africa), and it’s not hard to see why. Chinese brands just keep pushing the envelope on everything from aesthetics to pricing. Just this week, BYD unveiled a new lineup of EVs that can charge almost as fast as filling up a petrol tank. Meanwhile, Tesla is fiddling around with a re-release of the Model Y.
To most of us here on the Southern tip of Africa, it feels like the Chinese vehicle tsunami came out of nowhere – but in reality, this wave has been building up momentum since before Tesla released its first electric Roadster. So what’s the secret behind Chinese success?
You guessed it – it’s the government
Back in the early 2000s, China’s car industry was having a bit of an identity crisis. It was a manufacturing giant, sure, but they couldn’t hold a candle to the German, Japanese, or American automakers ruling the roads. Competing in the internal-combustion engine (ICE) game was clearly a lost cause. Those legacy brands had decades of R&D and motorsport heritage behind them. Even hybrids were already Japan’s domain, leaving China without an obvious lane to dominate.
So, instead of trying to play catch-up, China swerved entirely. The government bet big on a technology that, at the time, was more of a futuristic fantasy than a viable market: fully electric vehicles.
It was a massive risk. Back then, EVs were little more than niche science projects; GM had already scrapped its early attempt, Toyota’s EVs were short-lived, and Tesla was still a tiny startup. But for China, the potential payoff was too good to ignore. EVs weren’t just a way to stake a claim in the auto industry, they were also a solution to some of China’s biggest problems: choking air pollution, dependence on foreign oil, and the need for an economic boost post-2008 financial crisis.
In 2001, EVs became a priority project in China’s Five-Year Plan, the country’s most important economic playbook. Another key turning point came in 2007, when Wan Gang, a former Audi engineer and an early EV evangelist, became China’s minister of science and technology. He was an early and outspoken fan of Tesla’s first Roadster, and insiders now credit him with China’s decision to go all-in on electric cars.
One thing about the Chinese government: it does not do half-measures. It threw everything at making EVs work, handing out massive subsidies and pouring over 200 billion RMB ($29 billion) into tax breaks and direct incentives between 2009 and 2022. It even rigged the registration system for new cars in favour of EV buyers. If you want a petrol car in Beijing, you’re in for a battle for a licence plate in an expensive, years-long lottery. Want an EV? No problem – here’s your plate immediately – no wait, no fuss.
And when private buyers took longer than expected to bite, the government made sure EV companies had a market anyway. Public transport fleets became a testing ground for China’s first EVs, with cities buying up electric buses and taxis before consumer adoption took off. Shenzhen, home to BYD, became the first city in the world to electrify its entire bus fleet.
Fast forward to today, and the results of the Chinese government’s investment speak for themselves. From just 500 EVs sold in 2009, China hit nearly 11 million EVs in 2024. For reference, that’s more than half of all EVs sold worldwide. The subsidies have officially ended, but that seems to be OK in markets like China. The government’s early push gave Chinese automakers the momentum to go toe-to-toe with the biggest names in the business. Now they’re thriving, while legacy carmakers and erstwhile innovators are shrinking in the rearview mirror. Notably, not all markets have achieved the level of EV adoption seen in China, so subsidies remain an important factor elsewhere in the world.
Where’s the juice?
If there’s one thing that makes or breaks an EV, it’s the battery (obviously). It accounts for around 40% of the cost of the car, which means the challenge has always been the same: how do you make a battery that’s powerful, reliable, and still affordable?
While the West was focusing on lithium nickel manganese cobalt (NMC) batteries, China started its EV journey with lithium iron phosphate (LFP) batteries. These were cheaper and safer, but back then, they had some serious downsides, including low energy density and poor cold-weather performance. Instead of giving up on LFP, a few Chinese battery giants (like CATL) spent a decade fine-tuning the technology. Fast forward to today, and they’ve basically closed the gap, and the EV industry is catching on.
By 2022, roughly a third of all EV batteries were LFPs. That’s a direct result of China’s relentless innovation – but battery tech is just half the story. China also controls a huge chunk of the global supply chain for critical battery-making materials like cobalt, nickel sulfate, lithium hydroxide, and graphite. While other manufacturers are scrambling to lock in deals for raw materials with the likes of Chile and Australia, China had the foresight to dominate refining capacity years ago.
As a result, Chinese EV batteries are not only cheaper, but also more widely available, and that’s why China’s battery makers are now sitting at the top of the global supply chain. For rival EV makers, you can imagine that this is like trying to outdo Italy in espresso-making – if Italy also controlled the best coffee beans, the top roasting facilities, and the finest espresso machines in the world.
Temu Teslas for the win
The rise of these EV brands has gone hand in hand with a new generation of car buyers who don’t see Chinese brands as second-rate or inferior to foreign ones. These buyers grew up with Alibaba, SHEIN and Tencent, so they’re far more comfortable with Chinese brands than their parents, who still instinctively lean toward a German or Japanese badge. And remember, those same parents were once wary of anything made in Japan!
Millennial and Gen Z car owners put more value on affordability and a smaller debt commitment than on brand prestige or heritage (a lesson that Jaguar’s marketing department had to learn the hard way).
So, what happens next? Even if Tesla could somehow disentangle itself from the professional stick-poker that is Elon Musk, it still faces the challenge of falling behind a country that does everything at double speed, from innovating to manufacturing. It’s the classic tortoise-and-hare story – except in this version, the tortoise took the time to build itself a jetpack.
About the author: Dominique Olivier
Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.
She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting. She now also writes a regular column for Daily Maverick.
Dominique can be reached on LinkedIn here.
