How China Pulled Ahead to Become the World Leader in Electric Vehicles

The Washington Post

11:58 JST, March 4, 2025

JINHUA, China – In the manufacturing heartlands of eastern China, Jinhua New Energy Vehicle Town stands as a monument to the country’s decade-long march to dominance in electric cars.

Launched in 2015, the “town” is an industrial zone with ambition: Its fancy apartments and parks dedicated to “automotive culture” abut giant factories, so that workers might live and lead the electric vehicle revolution that would upend global car markets.

Today, Jinhua’s EV dreamscape is becoming a reality. The city is one of at least a dozen localities vying to become China’s Detroit for the electric age.

China now produces more than 60 percent of the world’s electric cars and 80 percent of the batteries that power them. Its automotive champions, once desperate for foreign cooperation, are these days sought out for their innovation.

“Now they are at the forefront of the technology,” said John Helveston, an expert on Chinese EVs in George Washington University’s engineering department, noting that Chinese companies spent a decade focused on cutting costs with automation and streamlined supply chains.

The global advance of such Chinese EV giants as BYD, which built more electric cars than Tesla in 2024, has concerned leaders in the United States and Europe, who worry that their automakers are under threat from Chinese rivals offering not just cheaper but potentially superior products.

This was a key concern for then-President Joe Biden, who imposed a 100 percent tariff on EV imports from China, then effectively banned Chinese-made connected vehicles, making it unlikely that Chinese-made electric cars will be available in the United States in the near future.

President Donald Trump doesn’t share his predecessor’s affection for climate-friendly cars – he has undone the Biden administration’s support for EV chargers and purchases – but he has promised to save the American auto industry. Analysts expect EV production and uptake in the United States to continue, but at a slower pace.

China, meanwhile, is pulling ahead. It sold nearly 13 million fully electric and hybrid vehicles in 2024, about four times as many as the United States, meaning EVs accounted for 40 percent of total sales in the Chinese market.

Environmentalists say this switch to electric cars will eventually help China curb its huge greenhouse gas emissions, although transport is a relatively small contributor compared with coal-powered industries.

For the leadership in Beijing, success in EVs is primarily a triumph of industrial planning. For Jinhua, it is a chance to recoup its investment in the EV industry.

Jinhua, an export hub of 7 million people in coastal Zhejiang province, and other Chinese cities are now deeply – and literally – invested in ensuring the country’s leading automakers get everything they need to produce more, cheaper and better electric cars.

The huge market has changed the economics of EVs in places like Jinhua. Over the past decade, they have used state-led investments to support cash-strapped EV makers in the name of accelerating innovation. City-backed funds took stakes in companies operating up and down the automotive supply chain, ensuring that everything from cheap raw materials to suppliers of in-car infotainment systems were readily available to nearby EV factories as automakers searched for a viable business model.

Many never found one, and dozens of start-ups failed. But other companies thrived and became the center of sprawling industrial clusters built around the needs of leading automakers.

Jinhua has Leapmotor, a start-up that sold 280,000 EVs last year, nearly double the number in 2023. It ranks seventh in the country for non-gasoline cars – above major international brands such as Volkswagen, Germany’s largest automaker – and it has been hailed by state media as the “biggest dark horse” in the EV race, with the potential to expand overseas.

“A lot of people don’t know us yet, but Leap will be impossible for anyone to ignore,” Zhu Jiangming, founder and chief executive of the company, said in a recent interview with local media.

That success has revived New Energy Vehicle Town after its pandemic-related slump and failed partnerships. A newly refurbished exhibition center for visiting delegations displays batteries, wheel hubs, seat covers, gearboxes and LED lights – all manufactured nearby. The exhibition describes expansion plans that it said will make the city “strong and rich.”

Leapmotor’s top-selling T03, a bubble-shaped mini compact, and its fancier C10 sport-utility vehicle are easy to spot on Jinhua’s streets, whether on the car carrier trucks that exit the factory in steady streams or being driven by locals.

Ye Can, who runs a nail salon in Jinhua, bought a T03 for $8,200 – a relatively low price even in China – in December after she and her husband tested similar EV models, including the General Motors-backed Wuling Hongguang Mini, and a gasoline equivalent. Leap won out on cost, cuteness and convenience, with its neat four-seat design, fast acceleration and app-controlled air conditioning, she said.

It helped that Leap was local, Ye said. “So long as our conditions were met, we wanted to prioritize our own car businesses,” she said.

Chinese EV-makers in the driving seat

Until a few years ago, international automakers such as GM, Volkswagen and Honda were thriving in China. Local rivals could not match their designs, quality or internal combustion engine technology, and Chinese buyers wanted the cachet of driving a foreign-branded car.

That was the age of joint ventures, an arrangement mandated by Chinese protectionism, in which foreign automakers supplied know-how to a local manufacturing partner that helped cut costs and navigate relations with Chinese officials.

The electric era has led to a dramatic reversal. Instead of Chinese automakers hoping to secure technology from overseas, it is now increasingly common for international brands to seek out Chinese partnerships to gain an edge in electric vehicles.

Some European companies are wasting no time tapping into China’s growing EV prowess, although American automakers have been cautious about expanding their footprint there.

“As China tried to catch up, and never did, on internal combustion engines, they felt the need to compel foreign automakers to bring technology to China with forced joint ventures,” said Stephen Ezell, vice president at the Washington-based Information Technology and Innovation Foundation think tank.

“Now you have European companies that cut a deal saying, ‘If you give us your EV technology, we can help you come into the European market,’” Ezell said.

Western automakers are now entangled in Chinese supply chains. That complicates efforts from the United States, the European Union and other governments to encourage their EV makers to catch up with Chinese rivals without relying too heavily on Chinese supply chains and partners.

The E.U. last year approved tariffs of up to 35 percent on Chinese EVs despite opposition from Germany, whose leading automakers – Volkswagen, BMW and Mercedes-Benz – sell about a third of their vehicles in China. Even with that additional cost, Chinese brands will probably still make more per car in Europe, where they can sell the same model at a significant markup compared with China, analysts at Rhodium Group, a New York-based research firm, found.

Even with tariffs, Chinese brands accounted for 8 percent of EV sales in the E.U. in 2023, up from less than 1 percent in 2019, according to Transport & Environment, a Brussels-based nongovernmental organization.

Concerns in Brussels and Washington about national security and long-term economic competitiveness are increasingly clashing with automakers’ desires to take advantage of the convenience, cost and scale offered by Chinese production hubs, where overheads are low, suppliers are plentiful, and it’s easy to quickly upgrade models to stay ahead of competitors.

“An automaker in the U.S. can’t build an affordable electric vehicle without relying on the Chinese supply chain. Full stop,” said Tu Le, managing director of Sino Auto Insights, a Detroit-based advisory firm. What’s more, China has at least five hubs the size of the “auto alley” that stretches down the U.S. Midwest from Detroit to the Gulf of Mexico, Le said.

While U.S. government restrictions on Chinese EVs have pushed American automakers to focus on competing without relying heavily on China, they have to contend with major European automakers instead partnering more closely with Chinese automakers and cities.

Volkswagen, for example, announced last year that it was investing $2.7 billion in an innovation and production hub to develop, manufacture and sell cars designed jointly with local EV-maker XPeng.

That hub will be based in Hefei, China’s EV capital and the inspiration for cities like Jinhua.

The next Hefei?

Hefei is widely celebrated – and replicated – in China. As many as 50 delegations from cities across China visit Hefei each month to learn from its experience, according to Chinese financial media.

The secret of Hefei’s success, according to official propaganda, is the $23 billion in investments in emerging industries that the city, through the “government-guided” funds, has made over the past decade.

In 2020, Hefei spent $787 million on a 17 percent stake in Nio, a luxury EV maker and Tesla challenger, as it was facing a cash crunch. Nio agreed to move its headquarters to Hefei and establish an industrial zone there to help attract other manufacturers. It worked.

The city now hosts six EV manufacturers, including BYD and the state-owned JAC Group and Chongqing Changan.

But there are growing concerns – in China and abroad – that the “Hefei model” won’t work for everyone and could create a market glut.

“All these local governments think, ‘If we throw money at it and attract some shiny new start-up, we’ll be the next Hefei,’” but they risk sparking “a race to the bottom within China,” said Ilaria Mazzocco, an expert on Chinese industrial policy at the Center for Strategic and International Studies.

Hefei is doubling down on its investments to keep ahead of emerging rivals. A city government-led investment consortium late last year announced a further $471 million investment in Nio, which ranked 12th in Chinese EV sales last year.

“That is exactly what Europe, the U.S. and other countries are concerned about: uncoordinated industrial policy that tends to create a multitude of companies that never go bankrupt,” Mazzocco said.

Despite these concerns, Jinhua is rushing to be the next Hefei. No company is more important to Jinhua’s plans than Leapmotor.

After a bumpy start in 2019, Leap is focused on being fast, technologically advanced and self-reliant. The company makes about 60 percent of its cars’ key components itself.

“It used to be that the mechanics of transportation were dominant, but cars are now more like an intelligent piece of electronics,” much like a smartphone, Cao Li, Leap’s executive director, said in an interview. “Having developed core components ourselves means that we can quickly adapt to market competition and user needs.”

Leap’s reputation for innovation helped the company secure $1.6 billion in investment from Stellantis, the Netherlands-headquartered giant that owns Dodge, Jeep and Chrysler, in October 2023.

The deal also allowed the Chinese company to tap Stellantis’s distribution networks to start selling Jinhua-made cars in 13 European countries in September and start assembling the T03 at a Stellantis factory in Poland – a first for a Chinese brand in Europe.

Leap has not yet disclosed its sales numbers in Europe, but the T03 in particular has been well-reviewed as unusually cheap for its official range of 165 miles and a good fit for a market where city runarounds are popular but rarely electric.

Zhu, Leap’s chief executive, said in December that the company is aiming to sell 500,000 cars this year, including 50,000 overseas.

Stellantis did not respond to multiple requests for comment on its partnership with Leap.

Despite its mixed success so far, Jinhua appears deeply committed to its EV vision – and to Leap, its champion automaker.

The determination is partly political. Across New Energy Vehicle Town are many signs reminding residents that building a stronger EV industry is of national importance. A Chinese Communist Party service center sits in the center of the town square. Large Chinese characters at the industrial park’s entrance declare: “Only when the party is strong can industry be strong.”