Why China is leading the EV adoption race globally

Walking through the streets of any of China’s many Megacities, you’d be forgiven for thinking that motorbikes had been banned. The usual rev of a combustion engine missing from the usual cityscape din.  

Instead, they’re all electric.

And the same goes for most of China’s vehicles with projected revenue for it’s EV market expected to reach a staggering US$377.4bn in 2025 (over 4 times that of the US) 

China has also surpassed the 50% mark for new vehicles purchases being EV or hybrids, with estimates in certain cities like Shanghai being close to 80%.

Incredible when you consider the penetration was closer to 10% during early 2021.

So how has the Middle Kingdom 5x’d their EV adoption in just 4 years? 

1. Government Subsidies

Most successful projects in China come with a large helping hand from the country’s Communist Government. The growth in EV adoption included. 

China's electric vehicle industry received at least US$231 billion in government subsidies and aid from 2009 to the end of 2024.

This included subsidies for electric vehicles to promote their adoption, encouraging manufacturers to produce and sell more EVs. 

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2. Mandates for Manufacturers

China has mandated that vehicle manufacturers meet certain new energy vehicle (NEV) quotas, meaning they must produce or import a certain percentage of EVs to meet the NEV credit requirement. 

Manufacturers failing to meet these requirements may face fines or must purchase credits from other manufacturers. 

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3. Tax Incentives

China has offered tax reductions and exemptions for NEVs, making them more affordable for consumers. 

Conversely there’s also reports of charging consumers tariffs of up to US$10,000 to purchase a non-EV number plate. To drive new vehicle purchases away from combustible and into Electric.

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‍4. Car Trade-In subsidy scheme

China has renewed its car trade-in subsidy scheme for 2025. The trade-in scheme has been highly successful at stimulating further demand in consumer demand for EVs.

Under the trade-in scheme, consumers can receive a subsidy of up to RMB20,000 (USD 2,730) when they scrap an older ICE vehicle or EV and purchase a new EV. Alternatively, they can qualify for a subsidy of up to RMB15,000 (USD2,047) when scrapping a vehicle and buying a new ICE vehicle with an engine smaller than 2.0 litres.

The result: 

China accounted for 73.1% of the global Plug-in Hybrid Electric Vehicles( PHEV) market in January, while the US only took a 4.5% share of registrations. Germany came third with 3.4%, then the UK with 2.4% and Japan with 1.3%.

While still large, the difference in market share was not as pronounced in the Battery Electric Vehicles (BEV) sector. China made up 53.6% of all-electric sales. The US was next with 12%, then Germany with 4.4%, the UK with 3.7% and France with 2.6%.

With China’s BYD sales (21.4%) now double that of Tesla (10.3%), also showing the impact this has had on homegrown Chinese EV companies.

It seems unlikely the Rest of the World will be able to catch up anytime soon. At least not without the drastic measures that helped supercharge this wide scale adoption.

The more pertinent question is will China be able to sustain this level of growth, particularly in the face of a slowing economy?

We’ll definitely be watching this one closely!

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