Road to electrification – Chinese automakers lead the way

According to Goldman Sachs, electric vehicles could make up as much as nearly half of global car sales by 2035. It is no secret to common folks that electric vehicles are expected to be a norm going forward. The global electric vehicle market is experiencing growth due to change in customer preference where customers are becoming more conscious of their ecological footprint and are opting for greener transportation options. Governments across the globe are offering subsidies, tax benefits, and other incentives to encourage consumers to switch to electric cars. Hence the rush to go green.

According to a statistic, more than one in three new car registrations in China was electric in 2023, over one in five in Europe, and one in ten in the United States. Even though the outlook seems optimistic, the road to electrification has its own hurdles to be overcome. Large investments are needed in all areas of the battery supply chain and companies able to make these investments as well as adjust their sales model are faring well in this race. According to a 2024 study, BYD a Chinese brand is the front runner in the EV sales race, followed closely by US-based Tesla and Wuling Motors, another Chinese brand, in third place. The race seems to be dominated by China with 4 Chinese OEMs featuring in the top 5 EV brands. Thanks to their low labour rates, healthy government subsidies and more favorable battery costs, allows the Chinese OEMs to offer lower prices than their European counterparts.

Hence, traditional auto makers are also making strides towards electrification targets and announcing investments to claim a slice of the growing pie. In Dec 2024, the industry woke up to the news of two auto behemoths entering a $60 billion merger – Nissan and Honda, with the sole agenda to compete with Chinese automakers in the electric vehicle market. It presented an opportunity for both parties to be able to share development costs as well as harness each other’s strengths to create a robust portfolio of electric vehicles. But as of Feb 2025, the talks of integrations have hit the brakes with Honda pushing for aggressive cost cuts, even attempting to make Nissan a subsidiary, with some industry experts terming it as a ‘near-hostile strategy’.

It is a classic case of history repeats itself in the industry where companies’ priorities shift and diverge. For example, Ford and Volkswagen teamed up in 2020 to work on EV and autonomous driving however they shut down the collaboration soon. The same year, Honda partnered with GM to sell two models of electric cars but have decided not to expand their partnership beyond the said models.

Meanwhile China is upping its ante in the game, with EV maker BYD adding advanced driver-assistance system for most of its models at no additional cost and further plans to integrate DeepSeek - AI chatbot in its models. Wuling motors is aggressively expanding its footprint in countries across Asia. For an industry observer, the stark difference in the electrified driving styles stands out between the Chinese and non-chinese players. Chinese are addressing customer issues that stand in their way of opting or transitioning to EVs, from battery range to vehicle cost and charging infrastructure to compelling features, while their global counter parts, barring Tesla, are yet to fully figure out a manageable and sustainable approach to EV production.