By producing more EVs, China aims to reduce its reliance on imported oil from countries such as Iran, Russia and Venezuela. It also hopes to leapfrog countries that historically have dominated the global car manufacturing industry, including Germany, Japan and the US. In September 2020, the Chinese government folded these objectives into a national decarbonisation strategy.
In 2025, more than half of the new cars sold in China were EVs. And Chinese-made vehicles are gaining traction around the world. In the United Kingdom, more than 30 per centof the new cars sold in 2025 were EVs. In Norway, EV sales surged to represent more than 95 per centof the country’s total car sales in 2025.
But they are proving less popular in the United States, with EV sales sitting at just 10 per cent. That’s even despite the US walling out Chinese EVs through tariffs.
Australia has also been slow to adopt Chinese-made EVs. But our market reached a tipping point in June 2026, when EVs made up close to 30 per centof new car sales.
Crucially, Chinese-made vehicles are no longer marginal. In 2026, China overtook Japan – the market leader over nearly three decades – as Australia’s primary source of new vehicles. Affordable models, rising fuel prices, an expanding charging network and the New Vehicle Efficiency Standard all accelerated this shift.
Tesla still sells the most pure battery EVs in Australia, holding 28 per centof the market. However, Chinese brands such as BYD, Geely and XPeng have gone from being fringe players to mainstream companies. BYD is a prime example, chasing Tesla with its 24 per centshare of the Australian market
These companies didn’t achieve success overnight. They spent years competing, failing and innovating in an often brutal domestic market.
At the height of China’s EV boom, more than 500 companies rushed into the EV sector. They were driven by cheap capital, local government backing and start-up enthusiasm.
Most did not survive.
As subsidies were wound back and purchase incentives became less generous, roughly 90 per centof early movers were squeezed out. So the state created the early market, but the market then ruthlessly punished weak players.
To stay afloat, companies had to adapt. Here are three examples.
Legacy brand Geely began as a refrigerator parts maker. But in 1994, it pivoted to produce motorcycles and China’s first domestically built scooters. It entered the automotive industry in 1997. To produce a competitive EV, Geely drew on the international engineering expertise of Volvo to improve on the product of premium global EV brand Zeekr.
As a latecomer, Xiaomi launched its first EV in 2024. Founded in 2010 as a software start-up, Xiaomi’s first successful product was an Android-like operating system for smartphones. But it soon brought this technology into the world of smart home appliances and EVs.
BYD
BYD started out manufacturing batteries, becoming China’s largest rechargeable battery producer by the early 2000s. But in 2003, BYD made the leap to EVs after acquiring a struggling state-owned carmaker. And in just two decades, BYD has become the vertically integrated titan of the EV world. By controlling its EV supply chain – ranging from power electronics to vehicle platforms and shipping – the company is able to assemble one vehicle every 52 seconds. In 2025, BYD delivered a record 4.5 million cars globally.
China’s hubs of regional expertise ensure individual companies can rapidly move from design to production. One example is the Pearl River Delta, where EV brands can tap into Shenzhen’s electronics prowess and Guangzhou’s long history in car manufacturing.
Despite its promising growth, China’s EV sector is now under strain.
The reasons for this are complex. But a saturated market and eroding profit margins are two key factors.
And domestic demand simply can’t absorb all the EVs China is producing. In the first half of 2026, Chinese car buyers spent nearly 13 per centless compared to the previous year. That represents the sharpest decline among China’s major consumer goods.
So for China, overseas markets are not just an expansion opportunity. They are a vital pressure valve.
Winning the global EV race requires more than low-cost production. Tariffs, data security, battery standards, charging infrastructure, resale values and consumer trust will ultimately determine if Chinese EV companies become globally-respected brands.
For Australia, the rise of China’s EV sector presents a strategic paradox. Without our own car manufacturing industry, we have little economic rationale to impose tariffs that mirror those of the European Union or US.
And relying on Chinese EVs would put the world’s clean energy transition at the mercy of Beijing. However, these vehicles could also help countries such as Australia rapidly reach their transport-emissions targets.
Rather than resisting this shift, countries should bolster their national standards around data security, vehicle safety and battery recycling, and fund more public charging networks. If not, we risk importing thousands of Chinese-made EVs without the knowledge or infrastructure to use them wisely.
