How China Beat the US in the Great EV Race

The US is somehow home to the most valuable electric vehicle producer in the world and, simultaneously, an also-ran in the race for EVs. How did that happen?

As recently as 2016, the US had more EVs on the road than China did. Now China has raced ahead.

Passenger electric vehicle fleet in US and China

Despite Tesla Inc.’s pioneering role in bringing electrification into the mainstream, the US EV effort is beset by angst. While sales jumped by 44% last year, that is expected to slow markedly in 2024, with signs of retreat not just in Detroit but at Tesla itself. Tesla briefly lost its crown as the world’s biggest battery EV producer in the fourth-quarter of 2023 to BYD Co. Ltd., and will likely do so again. Chief executive Elon Musk is on record saying that, absent trade barriers, Chinese manufacturers “will pretty much demolish most other car companies in the world.” Tesla’s gigantic valuation these days has more to do with visions of robotaxis rather than EV leadership, per se.

That China has stolen a march on the US when it comes to EVs is indisputable. It isn’t just that China accounts for six-in-10 of every EV sold worldwide, it also dominates the supply chain for the critical technology inside them: Lithium-ion batteries. China holds between 85% and 95% of production capacity for each of the major components of batteries, as well about 70% of global lithium refining capacity, according to Bloomberg NEF.