Opinion | How the US, home of trailblazer Tesla, lost the EV race to China

While China epitomises strategic synergy, the United States is caught in a conundrum of infrastructural challenges and market inertia. The evolution of China’s EV ecosystem showcases how strategic resources, when aligned with market forces, can catalyse self-reinforcing cycles of growth and advancements.

Central to China’s rise in the EV industry is its battery production supply chain. Contemporary Amperex Technology (CATL) has grown to dominate EV battery manufacturing, accounting for 36.8 per cent of the global market last year, against the 13.6 per cent held by South Korea’s top EV battery maker LG Energy Solution.

China’s top three EV battery makers – which include BYD and China Aviation Lithium Battery (CALB) – have a combined market share of over 57 per cent, a formidable grip. South Korea, the nearest competitor, has just 23 per cent of the market in the collective hands of its three biggest battery EV companies, which include SK On and Samsung SDI.

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Years behind in developing its battery supply chains, the US, even with scaled-back EV transition goals, may find itself reliant on Chinese-made EV batteries.

China’s EV success is supported by the rapid expansion of its charging infrastructure, coordinated by the government with private enterprises. China had established a network of 2.7 million public charging points by the end of last year, with a further 40 per cent growth projected this year. In contrast, the US has around 170,000 public EV chargers and aims to increase this to 500,000 by 2030.

Domestic demand is pivotal to the growth of China’s EV industry. Last year, while 1.2 million EVs were sold in the US, more than 8 million EVs were sold in China. And while EVs represented 37 per cent of car sales in China, they made up less than 8 per cent in the US.

This gap is exacerbated by the aggressive pricing strategies of Chinese EV makers, which offer a plethora of choices below 100,000 yuan (US$14,300), compared to the average price of over US$53,000 for the 10 bestselling EVs in the US. The adoption rates and pricing of EVs in the US and China highlight their respective ecosystems’ divergent performances – a disparity that will only be exacerbated by US protectionist measures.

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The co-evolutionary dynamic in China, characterised by the public-private reinforcement of resources, complementary infrastructure, affordable pricing and market demand in a supportive institutional environment, shapes the growth dynamics of its EV industry.

The success of China’s EV ecosystem is also inextricably linked to its transport system. EVs have become integral to China’s multi-modal transport infrastructure. In the US, however, they are mostly seen as a replacement for internal combustion engine vehicles in a country that remains largely dependent on private cars for transport.

But EVs thrive, paradoxically, not in isolation in displacing existing cars, but in concert with other modes of transport. EVs find their most effective application in the predictable rhythms of metropolitan commutes.

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The multi-modal transport approach leverages the complementary strengths of each mode: the convenience and nimbleness of EVs, the speed and efficiency of high-speed trains and the accessibility of subways – allowing each to play to its strengths. By such a harmonious blending of a cohesive transport matrix, EVs can realise their full potential as an effective component of an integrated transport network.

While the US served as a launching pad for Tesla’s ascent, the EV maker faces formidable Chinese competition and may increasingly have to depend on US trade policies to stay competitive. But without fixing the fundamental shortcomings in the US ecosystem, such expediency may only breed complacency, which precipitates decline.

Unlike the US, the EU’s green industrial policy is not aimed at China

A more fertile ground for the flourishing of EVs may be found in Europe, with its aggressive decarbonisation initiatives, densely populated urban areas and well-established public transport system. Europe is potentially a much larger and faster-growing EV market than the US. Given that Tesla already has a Gigafactory in Berlin, Europe could provide a crucial base for Tesla to sustain its market position.

In the high-stakes race for EV dominance, the decisive factor will be the seamless integration of EVs within comprehensive transport networks. The US, despite its pioneering role in the EV market, faces a significant handicap due to its deep-seated reliance on personal car ownership.

East Asia and Europe, which boast extensive high-speed rail and subway networks, stand at the forefront of the EV revolution. The key to unlocking the full potential of EVs lies in how they are woven into the fabric of our daily commutes within the mosaic of larger transport systems.

Winston Mok, a private investor, was previously a private equity investor

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Unlike the US, the EU’s green industrial policy is not aimed at China

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