China leads the global EV disruption

RethinkX Hero 6-min

We are in the midst of a disruption in transportation that will have profound implications for the global economy, geopolitics, the environment and more. China, the world's largest automobile producer since the late 2000s, has embraced new energy vehicles, particularly battery-electric vehicles in a way that no other country in the world has.

The numbers speak for themselves. From a mere half-million passenger cars exported in 2016, China has catapulted itself to the top of the global automotive export chart, with more than 4 million vehicles shipped in 2023. Michael Dunne, author of the Dunne Insights newsletter, predicts that in 2024 China will export 6 million vehicles to more than 140 countries worldwide.

car-exportsSee passenger car exports data here

This is not a simple case of Chinese-made vehicles replacing others on a one-to-one basis in the international market. Rather, China's EV revolution is expanding the overall global vehicle trade, with the total number of cars exported by China, Japan, Germany and the United States combined growing by 20% since 2019, even as all but China have seen their individual exports decline in that time.

The secret to China's success lies in its ability to offer well-made EVs at prices that are increasingly irresistible to global consumers. Commenting on the build of the Chinese EVs he has seen recently, RethinkX co-founder Tony Seba remarked, ‘Amazing quality. Just amazing. Equivalent of the Tesla Model S—90% of Tesla’s capability—for half of the price. The way that Chinese EV quality has improved over the past five years is just amazing. No company in the West can compete with this. No company in Japan can compete with this.’

And no companies are. Chinese manufacturer BYD, now the world’s largest maker of EVs, just celebrated the opening of their 100th dealership in Brazil. In Israel, Chinese car sales went from 3.5% of the market in 2022 to nearly 25% of the market in the first quarter of 2024. Already, sales of Chinese brands in Europe have gone from 1 in 200 new vehicles sold in 2019 to 1 in 11 in 2023. BYD intends to bring their Seagull hatchback to Europe in 2025 for less than €20,000 (US$21,500).

Part of China’s success is attributable to dominating the vertical market of key components. Chinese company CATL, just 13 years old, began by making smartphone batteries, but is now the world’s largest lithium-ion car battery company.

This success is not based on a disruption-from-below approach, where inferior but low-cost products are introduced to a market and then gradually improved over time. Instead, Chinese EVs are competing head-on with the best that the traditional automotive industry has to offer in all market segments, offering great quality vehicles across the board.

China has gone all-in on EVs by approaching the industry as an outsider, prioritizing efficiency, low-cost products and mass appeal, instead of trying to compete with the existing car industry incumbents that are simply trying to drop a touchscreen and battery into their existing, overpriced products.

Kevin Williams, writing for InsideEVs, says that Chinese EVs are ‘high-tech, well-executed machines in ways I hadn’t experienced from European or American manufacturers.’

Tony Seba, after walking the floor of the Shanghai Auto Show, remarked that the ‘software [of Chinese cars] beats anything I have seen in the West, except Tesla.’

Chinese automakers are also defining new market categories. The Farizon SuperVAN, for example, looks like a campervan but it is actually a mobile podcast and live streaming studio on wheels—a new form factor for a new generation. And with a 250-mile range and a price tag of just $23,500, it is one of many Chinese EVs that are appealing to younger purchasers. QZ reports that a recent AutoPacific survey found three out of four Americans under 40 years old would consider purchasing a Chinese brand vehicle while only one in four Americans over the age of 60 would consider buying a Chinese car.

The implications of China's EV revolution are enormous. The traditional automotive industries of Europe, North America and Asia face an existential crisis as they struggle to adapt to a world where EVs are not just the future but the present.

The rapid adoption of electric vehicles poses a structural threat to the oil industry, which fuels internal combustion engine cars, but also the steel industry and even the leather industry. They face reckonings of their own as some of their largest customers are disrupted.

If you dismissed Tony Seba’s claim from his 2014 book Clean Disruption that 200-mile-range EVs would become ludicrously cheap in the coming decade, you have missed one of the biggest trends now shaping the car industry: the low-cost, high-quality EV.

Perhaps the only hope of salvation for non-Chinese automakers at this point is to disrupt the very concept of individual ownership of cars through fleet-owned, self-driving robotaxis, offering what we call, 'transport-as-a-service'.

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