Electric vehicles (EVs) produced by Chinese companies have shocked the world in the last 5 years. Their quality and unbelievable price point, sometimes tens of thousands of dollars below their American and European counterparts, have drawn the awe of buyers, Tik Tok viewers, and YouTube reviewers, while sparking harsh tariffs from any country hoping to protect their native industries. On October 28th, the Chinese government released their newest 5 year development plan, in which EVs were no longer listed as a targeted industry for government support. Far from a signal that Chinese EVs will command less international attention, this move instead will likely provoke further international trade disputes.
China first designated EV manufacturing as a “strategic emerging industry” in 2010. At the time, China’s yearly EV sales were just over 5,000 units. Fast forward to 2024, China produced 12.4 of the 17.3 million EVs made worldwide, over 70% of total production. Its net exports totaled 1.25 million cars, and its export totals have increased by over 400% since just 2021. The explosion of China’s electric vehicle industry has come on the back of massive government subsidization, tax cuts, and grants. The Center for Strategic and International Studies estimates that the Chinese government has spent in total over $230 billion in subsidies, grants, sales tax exemptions and rebates on its domestic EV industry in the 15 years that the industry has remained on the government’s list of “strategic industries.” This number doesn’t even include the massive tax cuts regional governments have given to EV manufacturers to coax their factories which bring jobs and development.
Chinese government strategy has allowed its domestic industry to produce cars at prices simply unattainable in any other manufacturing nation, while intense competition (there are over 200 EV manufacturers in China) and slim profit margins have pushed companies to produce vehicles at a quality rivaling any foreign competitor. The rest of the world has been quick to notice these advantages, as Chinese EVs have been at the center of the current movement towards protectionist policy in international trade. The US and Canada have maintained 100% tariffs against Chinese EVs since the Biden era, while Europe currently levies 17–33% tariffs, on top of its general 10% tariffs on Chinese goods. Canada actually threatened to lower its tariffs on Chinese EVs specifically in response to Trump raising general tariffs on Canada by 10%, displaying the EVs importance in international trade debates.
The removal of Electric Vehicles from the CCP’s priority list brings a new chapter in the Chinese EV trade debacle. All is not well in the Chinese EV industry. The intense government subsidization, along with contracts between regional governments and automakers which prioritized pure production numbers over traditional profit incentives, has led to massive overproduction. The domestic market for Chinese EVs is flooded. Lots filled with unsold cars eventually head to government auction, influencers sell cars over Tiktok, and companies have begun a practice of selling brand unsold cars as “used,” dropping the price enough to gain any potential buyer. Profit margins for the EV manufacturing industry have dropped considerably since 2022, and of the 169 EV producers surveyed in China, a report from Jato Dynamics found only 14 have a market share above 2%. Surveys found that only 30% of car dealerships in China are profitable.
When government subsidies dry up, the race for profitability will enter into hyperdrive. Industry experts project only 10% of car manufacturers in China will reach 2030 revenue targets, and the CEO of Xpeng, one of China’s largest EV companies, has stated publicly he believes that only “5 Chinese manufacturers will remain in 5 years.” Given the oversaturation in the Chinese market, where the EV prices now start at $10,000, nearly every Chinese manufacturer has leveraged the survival of their company on one goal: expanding their presence on the international market.
In September, the secretary-general of the China Passenger Car Association (CPCA) projected that Chinese EV exports would double by 2030. BYD—the largest Chinese EV manufacturer by market share—announced that in 2025 it is targeting to double the amount of cars it sold internationally just the previous year.
Chinese firms have set their sights not just on foreign sales, but also foreign manufacturing. In 2024, Chinese EV manufacturers passed a massive milestone: they officially invested more money abroad ($16 billion) than domestically ($15 billion). EV-related investments now make up 25% of all of Chinese companies’ Foreign Direct Investment as of 2024, with that number increasing from just 5% in 2021. As of 2025, Chinese auto companies have finished construction on manufacturing plants in over 10 countries such as Germany, Hungary, Indonesia, and Brazil.
The new emphasis on foreign manufacturing allows Chinese companies to avoid the nearly worldwide high tariffs, and reach new consumer bases. Many countries have welcomed these Chinese investments, but just like the export battles before them, trouble likely looms. In 2024, the Chinese government directly requested that domestic EV companies cease investments in European countries which voted to approve new tariffs. The current rare earths saga shows that China will use its monopoly power over export industries to gain political concessions. As Chinese brands continue to expand into Europe, their competition with native industries will become a political issue sooner rather than later.
As a young person, I’m concerned about the long term effects of what I believe is a miscalculation by multiple news outlets, reporting that the CCP’s termination of the EV industry from its targeted industry list will mean a drawback in exports. I believe most evidence and statements from within the industry show the exact opposite is true: export pressures and foreign investments will likely surge in the coming years. Failure to properly understand the current situation could lead to Chinese EVs overtaking massive amounts of the international EV supply chain, significantly harming native industries and increasing international trade dependence on China.
Image Credit: Wikimedia Commons.
