How the EV Transition Is Reshaping the Global Auto Industry

The biggest transformation of the auto industry in a century is underway, as governments offer massive subsidies to speed up the shift to electric vehicles. In the past year, several surprises have emerged. One is the size of the lead Chinese automakers have opened, and just how difficult it will be for the rest of the field to compete with the lower cost and advanced technology of made-in-China cars. Another is the extent of the country’s dominance of the EV supply chain. And just as automakers have begun racing to catch up, the growth in demand for EVs has slowed globally. This combination could mean big losses for Western automakers and endanger ambitious goals for reducing the greenhouse gas emissions that come from road transportation.

Chinese brands account for about half of all EVs sold globally. Chinese companies have succeeded in taking domestic market share from former leaders such as Volkswagen AG, while homegrown champion BYD Co., the top brand within China, overtook Tesla Inc. as the world’s largest EV maker in the fourth quarter of 2023. China’s consumers are going electric in large numbers: fully electric vehicles (that is, not hybrids or plug-in hybrids) accounted for a quarter of all new passenger car sales there in 2023, compared with 15.7% of sales in Europe. Chinese smartphone makers Xiaomi Corp. was set to release its long-awaited EV in March, while Huawei Technologies Co.’s Aito model was the best selling EV among new entrants to the field in both January and February. (By contrast, Apple Inc. in March pulled the plug on its EV project after spending billions of dollars over a decade.)