Policy Backgrounders

China and Electric Vehicles

November 01, 2023

China, the world’s largest seller of and market for electric vehicles, is rapidly expanding its global ambitions for EV sales—which has already attracted an investigation from the European Commission as China’s sales to the EU have expanded rapidly, which the EU alleges results from high subsidies.

• China’s dominance of supply chains related to global EV production fuels its global ambitions and makes it more difficult for EU and US automakers to compete.
• The slowdown in China’s economy is also pushing Chinese companies to expand.
• While the US’ 27.5 percent tariff on China’s markets currently deters China’s ambitions in the US, the EU’s decision to ban the sale of cars with internal combustion engines by 2035 is putting great pressure on European automakers to adapt, starting from a higher cost base.