China's Electric Vehicles Hold 60% Market Share... Threatening US, Japan, and Europe Car Dominance [The Reality of China's Technology?]④

On the 16th, the BYD Atto 3, officially launched in Korea, was unveiled at the 'BYD Brand Launch Media Showcase' held at Incheon Sangsang Platform. Incheon - Photo by Kang Jin-hyung

The Chinese electric vehicle (EV) industry is showing unstoppable growth in the global automotive market. Chinese EV companies, which previously grew mainly in the domestic market, have now expanded their presence worldwide, including Europe, Southeast Asia, South America, and the Middle East, emerging as serious contenders challenging the global EV dominance. Chinese EV brands such as BYD, Geely, NIO, and Xpeng are forming a full-fledged competitive landscape with established automotive powerhouses based on price competitiveness, battery technology, autonomous driving technology, and government support.

In response to China's rapid growth, global EV companies like Hyundai-Kia, Volkswagen, and Tesla are also strengthening their strategies. However, due to the extremely fast growth rate of Chinese EV companies, there are forecasts that the leadership of the global automotive market could shift to China within the next five years.

Securing Competitiveness through Vertical Supply Chains

On the 20th, Kim Jae-deok, head of the Beijing office at the Korea Institute for Industrial Economics and Trade, said in an interview with Asia Economy, "The rapid growth of Chinese EV companies is based on building vertical supply chains, strong government support, cost reduction strategies, and technological innovation," adding, "By producing everything from batteries to semiconductors and motors in-house, Chinese EV companies are lowering production costs and expanding their global market presence."

Kim also stated, "The biggest strength of the Chinese EV industry is the establishment of vertical supply chains that produce batteries, semiconductors, and electric motors internally," emphasizing, "Especially in battery production, which is a core component of EVs, they hold an overwhelming advantage."

In fact, Chinese battery manufacturers CATL and BYD rank first and second in the global battery market, respectively, and have secured raw material stability by directly investing in lithium and cobalt mines, which are essential raw materials for EVs. They also hold an advantage in rare earth elements and have structured most of the raw material processing within China.

In particular, BYD has built a fully integrated supply chain producing everything from batteries (BYD Blade Battery) to semiconductors (Insulated Gate Bipolar Transistor (IGBT) chips) and electric motors in-house. This contrasts with Tesla’s model, which relies on external suppliers, and is evaluated as a foundation that manages both cost competitiveness and supply chain risks simultaneously.

BYD’s strategy has played a decisive role in lowering production costs and securing price competitiveness in the global market. For example, the BYD Dolphin model is sold in Europe for 25,000 euros (approximately 36 million KRW), which is 40% cheaper than the Tesla Model 3.

China’s full government support has also been a key driver behind the rapid growth of Chinese EV companies. China expanded its domestic market through tax reductions and preferential license plate policies for EV purchases and made massive investments in infrastructure such as charging station installations. As a result, as of last year, China had over 6.8 million public charging stations, accounting for more than 70% of the world’s total.

Kim explained, "The Chinese government has nurtured the EV industry as a national strategy through 'Made in China 2025' and carbon neutrality goals. By 2023, cumulative subsidies exceeded 100 billion dollars," adding, "Thanks to this support, Chinese EV companies have created an environment where they can simultaneously pursue cost reduction and technological development through large-scale production."

Conquering Emerging Markets and Targeting Premium and Autonomous Driving Markets

Initially, Chinese EV companies targeted the domestic market and emerging markets such as Southeast Asia and South America with low-priced models. However, recently, they have shown movements to enter the premium market by launching luxury sedans. Major companies like BYD, Geely, and NIO are consecutively introducing premium EV models and actively entering traditional automotive powerhouse markets such as Germany and the United States.

Notably, NIO launched luxury EVs priced above 1 million yuan (approximately 180 million KRW), competing with Tesla, BMW, and Mercedes-Benz, while BYD launched the premium brand 'YangWang' to aggressively target the high-end market. Regarding this, Kim analyzed, "Chinese EV companies secure price competitiveness in emerging markets first, then leverage that to increase R&D investment and brand value, pursuing a strategy to target the premium market."

Chinese EV companies are also building strong competitiveness in artificial intelligence (AI) and autonomous driving technologies beyond traditional automotive manufacturing. NIO, in collaboration with Baidu, launched vehicles equipped with Level 4 autonomous driving technology starting in the third quarter of 2024, and Xpeng is rapidly closing the technology gap by introducing the 'XNGP' autonomous driving system, similar to Tesla’s Autopilot.

Will Chinese EVs Dominate Global Hegemony?

As of last year, Chinese EV companies recorded overwhelming growth with a global market share exceeding 60%. BYD sold 520,000 EVs in the first quarter of 2024, surpassing Tesla to take first place, and CATL maintains the top position in the global battery market with a 36.8% share.

In response, the European Union (EU) has initiated anti-dumping investigations on Chinese EVs starting in 2024 to curb their entry into the European market, and the United States is also moving to restrict the use of Chinese batteries and parts through the Inflation Reduction Act (IRA) and other measures.

Nevertheless, Chinese EV companies are expected to continue expanding their influence in the global market through strategies such as establishing local factories, improving brand image, and enhancing service quality. Kim stated, "There is a high possibility that Chinese EV companies will become major players in the global market within the next five years," but also noted, "Challenges remain, such as anti-dumping measures from Europe and the U.S. and issues with brand trust."

He added, "The growth of Chinese EVs is changing the global automotive industry landscape not only by price competitiveness but also by securing technological capabilities," and suggested, "Korean automakers like Hyundai and Kia should further strengthen their competitiveness through innovation in EV and battery technologies and differentiated strategies."