How China conquered the EV market
They are no longer just 'copycats'
Once upon a time, the ocean was a scary place for whales. For years, big ships and men with sharp harpoons chased the whales. "Got you!" they’d yell, stabbing until the water turned red. Then they would slice off the blubber, like peeling a banana. These blubbers were turned into lamp oil. Then one day, the ships stopped coming! Had the hunters grown kind hearts? Not quite. Mankind had discovered black goo (crude oil) underground. Kerosene was a cheaper and better source for people to light their lamps. The whales threw an underwater party.
Years later, something similar has been happening in China’s smog-filled cities. Earlier, cars were coughing dirty smoke and factories were spewing black dust. Until suddenly, the air started getting clearer. Had people developed a love for earth’s atmosphere and started walking or bicycling? Had factories shut down? Not really.
ZOOM! Electric vehicles had arrived.
While the rest of the world was busy talking about saving the planet ("We should really do something… someday… maybe…"), China built the biggest electric car industry in a little over a decade (basically the time it takes me to clean my desk).
Just like the whales that were saved, NOT out of anyone’s love for them, China also did not do this to save the world from global warming. It did this because it faced a threat to its economy.
Sometimes, saving the world happens by accident.
Welcome back to The Lighter Side, where I pick one wild news story each week that makes me go, "Huh, that’s fascinating." Hope you enjoy this week’s tale of "Oops, We Saved the Planet Anyway!"
Let’s start where it all began
In 2001, China’s economy was growing fast, people were buying more cars and industries were growing every day. The country needed a lot of crude oil to run their cars and factories, but they did not have enough within their own country. So they had to import nearly 1.2 million barrels of crude oil daily. China’s leaders were not excited about relying on foreign countries for their crude oil. You never know when anyone would turn around and say ‘Sorry China. We are not friends with you. No crude oil for you.”
As these leaders gathered around in their fancy offices and looked out of their glass windows stroking their chin, they observed the grey and sepia-toned colour of the air in Beijing. The city’s air had 3x more lung-clogging nasties than what’s considered "safe".
They waddled back to their fancy chairs and discussed many ideas until one of them waved a dramatic finger in the air "Behold! The magical, mythical, electric vehicle. This is a vehicle without the stinky smoke that makes everyone cough like they’ve swallowed a dragon’s sneeze. What more, we don’t need to ask anyone to sell us crude oil to run these cars"
At the time, electric vehicles were about as real as unicorns. They were mostly found in sci-fi books, nerdy industry fairs, and the wild imaginations of kids who really loved batteries. No grown-up in their right mind (or wrong mind) actually thought these gizmos could replace real cars. But China’s bosses were willing to bet on these weird science experiments, so they would never have to beg for oil again. Plus, the air might stop looking like a bowl of cabbage soup gone bad.
With the enthusiasm of a panda bear who has just discovered lots of bamboo shoots, they set off on their grand quest: to make electric vehicles a thing. Whether the world was ready or not.
In 2001, China’s leaders listed the EV (electric vehicle) industry as an important research project in China’s Five-Year Plan, the country’s highest-level economic blueprint.
2007 brought an auto engineer. Wan Gang, an auto engineer who had earlier worked in Germany (for the carmaker Audi) became China’s minister of science and technology. He was a big fan of the electric vehicle technology, and had tested an American electric car maker whose name few people knew then. The company was Tesla. Wan Gang had tested Tesla’s first EV model, the Roadster, in 2008. He thought it had great potential and persuaded China’s leaders to go all-in on electric vehicles.
Even by 2009, after almost 8 years of spending on electric vehicles, only a handful of companies in China were able to produce electric cars or buses, and even these were not efficient. They could run short distances with each battery charge. They would also cost a lot more than the regular petrol or diesel consuming cars. Who would even buy them? Unless you had an overwhelming love for your planet, you would not want to empty your bank account on these cars.
The Chinese government, like a super-helpful big brother who really wants you to eat your vegetables, decided to give electric car companies a giant push.
(a) "We’ll Buy Your Weird Science Projects"
The government walked up to electric car companies and said, "Hey, we know your buses and cars go only short distances and cost a lot. But guess what? We’ll buy thousands of them and use them for our cities’ public infrastructure. Yep, we’re going to fill the streets with your half-baked experiments. Just promise to use the money to research and improve them. Make them really good someday, okay?”
(b) "Don’t Look at the Price Tag" Trick
Next, they turned to regular people and said, "We get it. Electric cars cost as much as a spaceship, and petrol cars cost as much as a toaster. But here’s the deal—if you buy these electric cars, you pay half and we’ll pay half!" Lots of people started lining up to buy these cars like it was free ice cream day.
(c) “Let’s build charging stations, people”
An electric vehicle runs on electricity (shocking right?). Just like we need petrol bunks to fill our cars running on fossil fuels, electric vehicle owners need someplace to charge their cars once their batteries die (unless you fancy pushing the car all the way home). So the government went around building charging stations along highways and city lanes.
They also ‘persuaded’ apartments to have their own chargers. "Install chargers… or else," whispered the bureaucrats to the landlords, in the same tone one might use to say, "Pay your taxes… or enjoy prison cuisine."
Fun-fact: Now China has more charging points than KFCs.
It wasn’t all just about helping these companies with money. There was also data. The Chinese government wasn’t just giving away money to electric car companies like a rich aunt at a birthday party. They were also playing mad scientist.
By buying thousands of electric buses and bribing people to buy electric cars, the government was quietly helping the car companies scoop up data. "Hmm, this battery dies after 5 minutes uphill... noted. This one catches fire if you sneeze too hard... interesting." Without all those buses and cars on the road, the companies would’ve been stuck guessing how to improve their tech.
Thanks to millions of people unknowingly testing these electric vehicles, the companies got smarter. Batteries lasted longer and cars got cheaper.
They funded and supported even foreign companies. The Chinese government wasn’t just cheering for their home team. They were happy to support even foreign companies, so long as they manufactured, did their research and sold their electric vehicles in China. That’s why China rolled out the red carpet for American companies like Tesla, way back in 2009. "Come on in, Elon! Build your fancy electric cars here! Just ignore the fact that we’ll copy your homework later."
China knew their own electric car companies were still figuring out how to make batteries that didn’t conk out halfway up a hill. So, they brought in Tesla ‘the superstar of electric cars’. This was like lighting a fire under their engineers. "Oh wow, look at Tesla’s cars! Maybe we should, you know, try harder and make ours better?"
The gamble paid off. Fast-forward to today, and Chinese electric cars are so slick, so efficient, and so high-tech, that Tesla’s models are starting to look like a grandpa’s golf cart and costs almost twice as much to make.
So Chinese EVs are great and cheap. Won’t other countries also get there soon enough?
Not really. The reason for that has something to do with batteries.
Batteries are the secret sauce in any electric vehicle. They make up 40% of an EV’s cost. China developed two varieties of them: LFP (cheaper and less efficient) and LMC (fancy, high-performance). China went about the world and cornered the market on all the minerals needed to produce these batteries (lithium, cobalt, nickel etc.). They bought the mines for these from around the world, before anyone was even looking.
Other countries woke up a lot later. "Oh no! We need minerals too!” They are still scrambling to sign deals with countries like Chile and Australia, where a few of these mines are still available for the taking.
China had this sorted decades ahead, and had built factories to process these raw materials, more than anywhere else in the world. China processes 60-90% of the minerals needed for batteries (lithium, cobalt etc.). So even if other countries did get the raw materials from countries like Chile, they still would have to take it to China to get them processed for the cheapest rate, the largest quantity and the fastest processing speed.
2025: Where is China?
China’s EV boom means that they don’t need Western cars anymore (bye-bye, German engines, Japanese cars and American SUVs!). Instead, they are selling EVs to the whole world. That means lesser imports and more exports. And lest we forget, cleaner air! Triple win!
So, while others were talking, China was doing.
Podcast you will love - stories of how the Kashmir conflict began
A young officer in the Royal Indian Army was told ‘The British will now be dividing India into Pakistan and India. Both countries will have their own armies. Which one would you want to join?’ The young man went home, thought about it long and hard, felt a strong pull from his religion (he was a Muslim) and decided to move to Pakistan to join the Pakistani army. His mother blessed him and insisted that ‘India was her homeland and religion would not pull her away from here.’
Months later, when the Pakistani and Indian armies would face each other in a battle, this young officer would be confronted by another young man who was leading his battalion from India. The other young man was his brother. Each had chosen a different country and believed in different ideas.
Their story is no different from the stories of people who lived in the state of Jammu and Kashmir. Should the state be a part of India or Pakistan? Which was better - a country which promised to be secular (but you never know if it really would), or a country that believed in a religion-led state and would welcome Kashmir’s Muslims?
I have put together these stories in a podcast tracing how the fight for Kashmir began in 1947. Hope you enjoy this episode.
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References for this article
MIT Technology Review paper on China and electric cars
BBC article about fears of Chinese spying and hacking on EV cars
Bloomberg article on China’s dominance on batteries and minerals
International Energy Agency: China continues to dominate refining of minerals
Reuters piece on ‘Has China’s crude oil imports peaked?’