Mapping the US-China rivalry in global EV race

The world’s two largest economies, the US and China, are aiming to best each other in different fields as supply chain tensions rise, which some say could head toward the two countries decoupling.

While semiconductors, chips, and AI have been a matter of contention between the parties, the trade-war is likely to spill into other industries such as electric vehicles (EV), which is growing at a rapid pace. Currently, the US and China have some of the most dominant brands in the four-wheeler EV space such as Tesla, BYD, Wuling Motors, and Faraday Future.

Although Tesla still remains a popular EV brand, Chinese companies such as BYD are heating up the race.

The US firm was the top-selling electric vehicle brand in 2022, with the Model Y and Model 3 together selling over 1.2 million car units. But in the first quarter of this year, BYD managed to surpass Tesla.

That said, it should be noted that BYD also sells plug-in hybrid EVs apart from its battery electric cars. As Tesla is a pure battery EV player, it could mean that the firm still dominates that market.

While Tesla’s global brand recognition propelled it to the top, the company’s recent price cuts have helped increase sales and fend off competition.

China leads in the emerging markets

Most countries that are primed for EV adoption – with supportive infrastructure such as public charging stations – are often higher-income nations. This may be an advantage for Tesla sales, with its cheapest model, the Model 3, costing at least US$40,000.

Though the US brand may be in the lead, seven of the top-selling EV automobile firms hail from China. On the whole, China has seen a greater number of exports with significantly cheaper options, such as the US$5,000 Wuling Hongguang Mini Air EV, which is the third-highest-selling EV car model globally last year.

For this reason, Chinese companies such as BYD have been able to better penetrate emerging economies across Asia, Africa, and Latin America. Emerging markets, including China, make up 85% of the global population, and these markets offer significant growth potential for EV brands.

In the US and Europe, electric cars are mainly offered at a luxury price point, while in most other markets, affordability would be required to increase adoption.

Domestically, China has also seen a higher adoption rate for consumer EVs, with over half of global sales last year coming from the country alone. One of the reasons for this is the supportive infrastructure. The country also has the largest EV production base in the world, with 64% of the global volume manufactured in China.

At the end of 2022, China had over 1.8 million public charging stations across the country, while as of May 2023, the US had around 500,000.

China has undoubtedly benefited from government support, as some of the biggest companies contributing to the nation’s EV infrastructure are state-owned, including the China State Grid and China Southern Grid.

That’s different in the US, where a car brand (Tesla) is the second-largest player for EV charging infrastructure across the country.

That said, in February, the US government announced plans to invest US$7.5 billion to boost EV charging infrastructure.

Decoupling to affect Tesla and BYD