Initiative for U.S.-China Dialogue on Global Issues

During our visit to Shenzhen in May 2024 as part of the U.S.-China Student-to-Student Dialogue, we learned about China's booming electric vehicle (EV) market. Our visit to the BYD headquarters was a memorable trip, exposing us to the far-reaching impacts of emerging technologies that are well integrated into the market. Our experience underscored that in the quest for electric vehicle adoption, China stands out as a clear leader.

By 2025, China is expected to account for over 50% of global EV sales. While car sales are booming in China, the same can't be said for the U.S. consumer market. Comparing the cheapest models from the two biggest EV-makers in each country, BYD in China and Tesla in the United States, highlights this disparity. The base model BYD Seagull costs about $10,700 in China, while the Tesla Model 3 in the United States is currently priced at $38,990—nearly four times more expensive. Moreover, U.S. consumers can't access these cheaper Chinese models, which would help the country reach its goal of net zero emissions by 2050. Recently, U.S. President Joe Biden increased the tariff on Chinese EVs from 25% to 100%, further hindering market growth in the United States.

China's dominance in the EV market is no accident. From 2009 to 2022, the Chinese government provided over $29 billion in subsidies, research funding, and tax breaks to its EV makers. China not only excelled in investing in production but also in stimulating demand for EVs, creating a market for newly manufactured vehicles. By securing procurement contracts to electrify public transit, buses, and taxis, the government enabled an immediate revenue stream for manufacturers.

In addition to producing the majority of EVs at affordable prices, China also controls much of the global supply chain for car batteries, giving it a significant edge over the United States, as battery costs make up about 40% of EV manufacturing expenses. A large portion of the world's critical minerals for lithium-ion batteries—such as nickel, cobalt, manganese, and lithium—are refined in China. China also leads in technological innovations in battery technology. BYD's lithium iron phosphate (LFP) blade battery, for instance, avoids using expensive minerals like nickel and cobalt, which lowers its costs. In contrast, the United States relies on nickel, cobalt, manganese (NCM) batteries, known for longer range but higher costs.

U.S. policymakers are increasingly concerned about China's dominant position in EV and battery production, prompting efforts by American automakers, including Tesla, to compete with BYD and other Chinese firms in producing affordable EVs. The first mass-market models are slated for production in Texas by 2025, aiming for a price around $25,000—though still higher than comparable BYD vehicles.

To counter China's dominance, the United States has invoked concerns over trade practices, human rights issues, and environmental impacts to justify increased tariffs on Chinese EVs. Additionally, the Biden administration has introduced clean vehicle tax credits, boosted EV research and development funding, expanded charging infrastructure, and prioritized government EV procurement. While these measures support the domestic EV market in the short term and promote local manufacturing, their long-term sustainability remains uncertain amidst global competition.

Elene Chkhaidze (SFS'25) is a junior majoring in international politics with a minor in Arabic at Georgetown University in Qatar.