ISLAMABAD (Urdu Times) China’s Electric Vehicle Revolution: How Industrial Policy Created a Global Green-Technology Powerhouse

Written By Ms. Fahiya Rabnawaz, a Participant of ICSF-SBBWU Fellowship Programme 2026-2027

ISLAMABAD (Urdu Times) Electric vehicles (EVs) have evolved from an emerging technology to a strategic business as a result of the worldwide shift toward sustainable development. China stands out among the nations spearheading this change as an illustration of how industrial policy, technological advancement, government assistance and market rivalry can completely revolutionize a sector. China, which was hitherto reliant on foreign automotive technology, has reinforced its battery supply chains, created a globally competitive electric car sector and become a significant exporter of green technology.

China’s achievements took time to materialize. It came about as a result of decades of well-coordinated policy interventions, including as financial incentives, investments in infrastructure for charging, support for research and development, growth of domestic markets and encouragement of home manufacturing. By taking these steps, Chinese companies were able to lower production costs, get economies of scale and develop technological capabilities.

China manufactured almost 16 million electric vehicles in 2025, making up nearly 75% of the world’s total, according to the International Energy Agency. This accomplishment shows that green industrial transformation is not just an environmental requirement but can also become a source of economic competitiveness.

China is now the world’s top producer of electric vehicles. In 2024, the nation produced about 12.4 million electric vehicles, by 2025 that number had risen to over 16 million. In 2025, it accounted for over 75% of global production. The combined effects of local demand, production capacity, technical advancement and a vast supply network are shown in this increase. Chinese producers like BYD, SAIC, Geely and NIO have improved their standing at home while growing their global footprint.

Industrial growth has been supported by China’s home market. Over 11 million electric vehicles were sold in China in 2024, making up nearly half of all domestic auto sales. China has established a solid position in the production of batteries and the processing of necessary battery components.

Manufacturers were able to divide research and development costs across millions of vehicles, enhance product quality, collect consumer input and produce at scale thanks to a sizable domestic market.

Purchase incentives, tax exemptions, research funding, preferential financing, state procurement and investments in charging infrastructure are just a few of the governmental tools China used to boost the EV business. Government assistance also promoted the growth of supply chains for necessary components and indigenous battery manufacturing.

These measures encouraged companies to invest in production capacity and innovation while lowering the initial risks associated with a developing technology. However, the scope and type of assistance have evolved throughout time, with a stronger focus on industrial competitiveness, tax incentives and market competition. China produced more than 80% of the world’s battery cells in 2025, according to the IEA. Businesses like BYD and CATL have helped to reduce costs, improve manufacturing efficiency, and advance battery technology

The EV market in China has been growing outside of its own borders. China shipped almost 1.25 million electric cars overseas in 2024, making up around 40% of all electric car exports worldwide. Over 2.5 million electric cars were exported from China in 2025, a more than twofold increase.

China’s long-term strategy to industrial development is a key factor in the country’s EV revolution. Chinese officials see electric mobility as a strategic opportunity to build new technology capabilities rather than depending solely on current car technologies.

When it came to competing with global producers of traditional internal combustion engine automobiles, China’s well-established automotive sector faced significant obstacles. Batteries, power electronics and electric drive trains in particular provided an opportunity to gain knowledge in a novel technological system through electric mobility.

High upfront expenses, unpredictability in technology and low customer demand are common challenges for emerging sectors. China combined supply-side and demand-side measures to remove these obstacles.

On the supply side, producers were able to create local supply chains, enhance technology and build production facilities thanks to public backing. Demand-side factors that promoted the adoption of electric vehicles were public-sector procurement, tax breaks, buying incentives and charging infrastructure.

These actions made it possible for manufacturers to lower unit costs and increase production. Businesses had more resources and incentives to spend in technical advancement as adoption grew. However, industrial success cannot be ensured by public support alone. Inefficient businesses, excessive production capacity and reliance on government support can all be encouraged by poorly structured subsidies. Thus, China’s example highlights how crucial it is to combine industrial assistance with performance, innovation and competitiveness.