Andy Xie

Opinion | China’s lead in electric vehicles is unassailable – the Global North simply can’t compete

China has the supply chains, better tech and cheaper costs that keep on falling

Trade barriers would only force the world into two prices for one product – where the cheaper one is also likely to be better

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Robotic arms assemble Leapmotor’s electric vehicles at a factory in Jinhua, in China’s eastern Zhejiang province. Photo: Reuters

Andy Xie

Published: 10:00pm, 10 May 2023Updated: 11:07pm, 10 May 2023

The rapid expansion and innovation of China’s electric vehicle industry has made EVs more affordable for the world. As more EVs become cheaper than cars that use internal combustion engines (ICEs), the climate-friendly choice is also becoming an economical one.

Yet the Global North is likely to erect barriers in the name of national security. The Global South, however, will welcome Chinese EVs to ease its dependence on imported oil – also a matter of national security – lower transport costs and boost productivity.

The increasing cost competitiveness of EVs was on display at the just-concluded Shanghai auto show. China’s new battery technologies, which rely on cheap and plentiful minerals, are stabilising costs and removing the biggest risk to EV adoption: dependence on scarce minerals.

As EV production costs fall in China, it is only a matter of time before the vehicles become much cheaper than ICE cars.

The EV industry is probably the first major modern industry that China is leading, similar to Japan’s leadership in electronics in the 1980s. The EV supply chain is mostly in China so its EV prices, other than reflecting the costs of imported materials, also reflect the cost of labour in China. Without a technological edge, EV makers in the Global North will have a hard time overcoming China’s cost advantage.

The EV industry’s coming of age is China’s Walkman moment. It is a reflection of the efforts to develop indigenous capability throughout China’s supply chain and by Chinese private companies. As a largely electronic product, EVs fit well with China’s manufacturing strengths. But it was also a lucky break for China that many of the global carmakers that dominated its market chose not to fully commit to EVs – and are thus being left behind.

Opinion | China’s lead in electric vehicles is unassailable – the Global North simply can’t compete

China has the supply chains, better tech and cheaper costs that keep on falling Trade barriers would only force the world into two prices for one product – where the cheaper one is also likely to be better

China has the supply chains, better tech and cheaper costs that keep on falling

Trade barriers would only force the world into two prices for one product – where the cheaper one is also likely to be better