China EV Battery Dominance: How It Won the Race

China EV battery dominance did not happen overnight. Two decades ago, the country had only a couple of companies experimenting with lithium-ion cells for vehicles. Today, Chinese manufacturers produce the vast majority of the world’s EV batteries and control almost the entire supply chain that powers the global transition away from fossil fuels. IEA+1

From the lithium-powered buses of the 2008 Beijing Olympics to giant “gigafactory” clusters that now dot the Chinese coastline, this is the story of how a deliberate national strategy, fierce competition, and relentless cost-cutting turned China into the undisputed superpower of EV batteries.

In this long-form explainer, we’ll unpack:

How a small Olympic experiment kick-started a world-beating industry
Why the US and early pioneers failed to turn their head start into dominance
How subsidies, regulations and “walled-off” markets powered China EV battery dominance
The rise of giants like CATL and BYD – and what makes them unbeatable (for now)
Whether next-generation technologies like solid-state batteries could shift the balance

How China EV Battery Dominance Emerged from a Bus Fleet

In the early 2000s, China’s streets were dominated by diesel buses and gasoline sedans. Electric vehicles were, at best, a curiosity. Yet behind the scenes, Beijing was quietly preparing for an experiment that would fundamentally change its industrial future.

When Beijing won the bid to host the 2008 Olympic Games, the government decided the event would showcase a “green and high-tech” China. Part of that meant deploying a fleet of electric buses powered by lithium-ion batteries instead of diesel engines.

At that time:

China had only two companies capable of producing EV batteries at any scale.
The domestic lithium-ion industry was tiny and largely focused on small electronics, not vehicles.
Japan and South Korea dominated global lithium-ion battery production, supplying batteries for laptops, cameras and early electric concepts.

Researchers at institutions like the Beijing New Materials Development Centre were tasked with assessing whether China could support an EV battery supply chain robust enough for the Olympics. The conclusion: the industry was small, fragmented, and technologically behind – but the opportunity was enormous.

The Olympic e-bus project became a national trial balloon. If China could get lithium-ion buses safely and reliably running for the world’s biggest sporting event, it could do the same at scale across its cities.

The experiment worked. The buses performed well enough that policymakers convinced themselves of something bold: if China moved early and decisively into EVs, it might leapfrog the West in the next generation of automotive technology.

That conviction would become the backbone of China EV battery dominance.

The Global Roots of Lithium-Ion – and China’s Late Entry

Lithium-ion batteries were not invented in China. Their origins stretch back to decades of research in the US, UK and Japan.

Stanley Whittingham, John Goodenough and Akira Yoshino – British-American, American and Japanese chemists – laid the foundational work that turned lithium-ion into a practical technology, ultimately winning the 2019 Nobel Prize in Chemistry for their contributions.
In 1991, Sony commercialised the first lithium-ion battery for consumer electronics, enabling lighter, longer-lasting gadgets.
By the late 1990s, Japanese and South Korean firms dominated battery production for phones and laptops. Companies like Sanyo, Sony, Panasonic, LG Chem and Samsung SDI were global leaders.

China was a latecomer. Its early participation was often through:

Contract manufacturing for foreign brands
Low-margin assembly work
Supplying batteries mainly for small devices, not cars

At the turn of the century, Japanese firms commanded over 90% of the global lithium-ion battery market, with South Korean companies rapidly catching up. China was, at best, a minor player in the value chain.

But being late turned out to be an advantage. While incumbents were focused on electronics, China’s industrial planners began thinking much bigger: cars, buses and eventually entire energy systems powered by batteries.

From “Made Cheap” to “Made Smart”: China’s 2006–2010 Turning Point

The real pivot toward China EV battery dominance began with national strategy.

In 2006, China’s State Council launched a long-term science and technology plan that ran to 2020. Among 60+ priority areas, one stood out for the future of transportation: “low-emission and new-energy vehicles (NEVs)” – including pure electric, plug-in hybrid and fuel-cell vehicles.

Crucially, “rechargeable power battery” was explicitly named as a key technology. This signalled that:

EV batteries were not just a niche research topic; they were a strategic industrial priority.
China wanted to move away from being “the world’s factory” based on cheap labour and towards technological leadership.

In 2009, with the success of the Olympic buses as proof of concept, China launched an ambitious plan to “adjust and revitalise” its auto industry. Policymakers realised the country had repeatedly failed to build a globally competitive conventional car industry based on combustion engines. But EVs were different: everyone was starting from near-zero.

This created a rare historical window where:

Legacy carmakers in Europe, Japan and the US had no overwhelming advantage
There were no entrenched global standards for EVs or EV batteries
Aggressive latecomers could shape the rules – and the market

China’s answer was to treat EVs as a national project, not just a consumer product.

Building the Market: Subsidies, Buses and the “10 Cities, 1000 Vehicles” Plan

To turn plans into reality, the government needed two things:

A way to create demand for EVs and batteries
A way to nurture local champions that could scale up manufacturing

The first big move was the “10 Cities, 1000 Vehicles” programme, launched in 2009. The idea: support at least 10 pilot cities to roll out fleets of new-energy buses, taxis and public vehicles, seeding demand for domestic EVs and batteries.

This meant:

Local governments were encouraged (and funded) to buy electric buses and taxis.
Battery makers had a guaranteed early market in public transport fleets.
Engineers and policymakers could gather real-world data on charging, range, safety and maintenance.

Soon after, China expanded its backing to the broader market:

Large purchase subsidies for electric cars and buses
Tax breaks for NEVs
Support for building charging infrastructure
Funding for R&D in batteries, motors and power electronics

By 2013, subsidies were extended beyond public fleets to individual consumers, unlocking the private EV market. That decision was transformative: it turned EVs from state-sponsored curiosities into genuine alternatives for everyday drivers.

The results were fast and dramatic. NEV production and sales in China more than tripled in 2014–2015, and market share climbed from barely over 1% in 2015 to over 40% less than a decade later. IEA+1

In other words, China built its battery industry by first building an EV market big enough to sustain it.

Why the US Didn’t Lead the EV Battery Era

Ironically, many of the ideas that inspired China EV battery dominance came from the United States.

As early as the 1970s, oil crises pushed US researchers and automakers to explore electric vehicles. In 1990, California’s Air Resources Board (CARB) launched the landmark Zero-Emission Vehicle (ZEV) program, which effectively forced major automakers selling in the state to produce a minimum quota of zero-emission vehicles. ScienceDirect+1

In theory, this could have created a powerful US-based EV and battery industry. In practice, it didn’t.

Several things went wrong:

Lobbying pressure: Oil companies and traditional automakers pushed back hard, arguing the ZEV mandate was unrealistic. Over time, regulations were watered down to give more credit to hybrids and other non-lithium technologies. California Air Resources Board+1
Fragmented industrial focus: Instead of committing to one technological pathway, US policy bounced between fuel cells, hybrids and various alternatives.
The 2008 financial crisis wiped out a generation of clean-tech startups working on advanced batteries and EVs. Funding dried up just as companies needed capital to scale.

One symbol of this lost opportunity was A123 Systems, a US startup that developed advanced lithium-ion technology spun out of MIT. After severe financial stress, A123 filed for bankruptcy and many of its assets were acquired by Chinese firm Wanxiang in 2013 – effectively transferring cutting-edge battery know-how overseas.

From Beijing’s perspective, this was all deeply instructive:

It showed how policy inconsistency and lobbying could derail a promising EV transition.
It highlighted the importance of sustained, long-term industrial planning.
It signalled that a determined latecomer, willing to buy and absorb foreign technology, could catch up fast.

China decided it would not repeat the US’s mistakes. The result was a far more coordinated and aggressive strategy – one that would cement China EV battery dominance.

2012–2020: The Snowball Years of China EV Battery Dominance

The years between 2012 and 2020 were when everything came together.

Massive Subsidies and Clear Roadmaps

China released detailed industrial roadmaps for new-energy vehicles, spelling out:

Target numbers of EVs on the road
Technical requirements for batteries and vehicles
Efficiency, safety and range benchmarks for qualifying for subsidies

Crucially, only EVs and batteries that met these technical thresholds would receive government support. That pushed companies to constantly innovate and improve performance.

At the same time, subsidies exploded:

In 2014, central and local governments together spent nearly 10 billion yuan (around USD 1.6 billion at the time) on EV subsidies.
Over the following eight years, total support – including tax breaks – would reach around 200 billion yuan, or tens of billions of US dollars.

This level of backing made EVs far more affordable to consumers and gave battery producers enough demand certainty to justify massive investments in new factories.

A Walled Garden: The “White List” Policy

One of the most consequential – and controversial – moves in this period was the battery “white list” introduced in 2015.

Here’s how it worked:

If an EV maker wanted its vehicles to qualify for subsidies, it had to use batteries from suppliers on a government-approved list.
All 57 companies on that list were Chinese.
Foreign battery giants with factories in China – including Japanese and Korean firms – were effectively excluded from subsidised EV projects.

Technically, the rules were framed in terms of safety, performance and technical standards. In practice, they were specifically designed so that only Chinese companies could comply. ITIF

The impact was dramatic:

Chinese automakers that had been using foreign batteries were forced to switch to domestic suppliers such as CATL and BYD.
Korean and Japanese firms that invested heavily in Chinese plants suddenly found themselves cut out of the fastest-growing EV market in the world.
Domestic battery makers saw a surge of guaranteed demand, allowing them to scale up at breathtaking speed.

The “white list” policy only lasted four years, but that was enough. By the time it was phased out, Chinese companies had become both technologically competitive and massively scaled – and China EV battery dominance was effectively locked in.

How CATL and BYD Became the Twin Engines of China EV Battery Dominance

Two names define the modern era of EV batteries: CATL and BYD.

CATL: The Quiet Giant

CATL (Contemporary Amperex Technology Co., Limited) started as a department within ATL, a company making lithium batteries for consumer electronics. In 2011, it spun off to focus on automotive applications.

Several strategic decisions underpinned its rise:

Hyper-focus on large-scale manufacturing: CATL invested early in huge, highly automated plants capable of producing enormous volumes of cells with tight quality control.
Vertical integration: The company gradually built or acquired stakes in key suppliers – from cathode and anode materials to recycling – giving it cost and supply stability. IISD+1
Global partnerships: CATL signed deals with major automakers including Tesla, Volkswagen, BMW and others, using joint development projects to move quickly up the technology curve.

By 2024, CATL held roughly 38% of the global EV battery market, more than double its nearest rival. CnEVPost+1

Analysts often highlight CATL’s ability to deliver:

Consistently high-quality cells at scale
Competitive energy density and safety performance
Lower costs than rivals in Europe, the US and even other parts of Asia

These advantages are exactly what automakers need in a fiercely competitive EV market.

BYD: Automaker and Battery Powerhouse Combined

While CATL focuses primarily on batteries, BYD plays both sides: it is a major EV manufacturer and a leading battery supplier.

BYD originally made a name for itself producing batteries for phones. It entered the auto sector in the early 2000s and then evolved into a fully integrated EV maker. Its in-house battery arm, FinDreams Battery, gives BYD end-to-end control from materials to cars.

One of its most important innovations is the “Blade Battery”, a lithium-iron-phosphate (LFP) design introduced in 2020. LFP batteries:

Use no cobalt, reducing reliance on expensive and politically sensitive materials
Are cheaper and generally safer, with lower risk of thermal runaway
Historically had lower energy density – but BYD’s design helped close much of that gap

The Blade Battery packs cells in a long, thin format that can be directly integrated into the vehicle structure, increasing space efficiency and crash safety. The design has been widely praised and has reshaped the market’s perception of LFP technology.

As a result, LFP has resurged, especially in China, where many mass-market EVs now use it. Global automakers are increasingly adopting LFP packs in lower-cost models, often sourcing them from Chinese suppliers.

In 2024, BYD held over 17% of the global EV battery market, second only to CATL – and its share has kept rising. CnEVPost+1

Together, these two giants are the twin engines of China EV battery dominance.

The Supply Chain Behind China EV Battery Dominance

It’s not just mega-factories and generous subsidies. What really sets China apart is its complete battery ecosystem.

According to the International Energy Agency:

China accounts for well over half of global processing for key battery materials like lithium and cobalt.
It controls almost 85% of global battery cell production capacity. IEA+1
In 2024, China produced over three-quarters of the world’s EV batteries, with prices dropping faster there than anywhere else. IEA

This ecosystem includes:

Raw material refining: Even when China doesn’t mine the most lithium or cobalt, it often refines those raw materials into usable battery-grade chemicals.
Component manufacturing: Cathodes, anodes, separators, electrolytes – Chinese firms dominate across these crucial components.
Gigafactory clusters: Entire industrial parks are dedicated to batteries, where suppliers and manufacturers are physically co-located to reduce logistics costs and speed up innovation.
Recycling networks: The country is investing heavily in used battery recycling and second-life applications, further strengthening its control over materials.

This depth gives Chinese firms cost, speed and resilience advantages that are extremely difficult for rivals to replicate.

The Human Factor: Practicing Engineers and Battery Talent

Technology and policy matter, but so do people. China EV battery dominance is also built on a vast pool of practical engineers.

China’s universities, vocational schools and companies have spent years training:

Materials scientists focused on cathodes, anodes and electrolytes
Process engineers who understand how to turn lab breakthroughs into scalable production lines
Battery-management-system (BMS) specialists who optimise performance, safety and longevity

Industry insiders often talk about a class of “practicing engineers” – workers who are neither purely academic researchers nor low-skilled factory labour. They:

Understand the physics and chemistry of batteries
Know how production lines operate in real life
Can tweak processes quickly to improve yield, performance or safety

Companies like CATL employ tens of thousands of engineers, while BYD’s battery division alone has more than 10,000 technical staff working on continuous optimization and new chemistries.

This human capital is one of China’s least-appreciated advantages – and one of the hardest to copy.

China EV Battery Dominance Meets Global EV Demand

China didn’t just build batteries; it also built the world’s largest EV market.

Various analyses show:

China manufactures the majority of the world’s electric cars and a massive share of exports. The Washington Post+1
In some recent years, more than half of global EV sales have occurred in China alone. BloombergNEF+1
China’s share of global EV battery demand is around 60%, and even by 2030, it’s expected to remain the single largest source of demand despite relative declines. IEA+1

At the same time, the IEA notes that the battery manufacturing capacity planned or already under construction in China is more than double what the country will need domestically by 2030. That means:

China is building capacity with exports in mind – EVs and batteries alike. IEA+1
Excess capacity can put pressure on global prices, making Chinese products hard to beat on cost.

For automakers in Europe, North America and emerging markets, this creates a paradox:

Politically, many governments want to reduce dependence on China.
Economically, Chinese batteries are often cheaper, better and more readily available than alternatives.

That’s the commercial reality underpinning China EV battery dominance.

Can Anyone Catch Up to China EV Battery Dominance?

Given the scale of China’s lead, is there any realistic way for others to catch up?

The Challenge of Replicating the Ecosystem

Countries in Europe, North America, India and elsewhere are pushing to build their own battery industries. They are offering:

Subsidies and tax incentives for local gigafactories
Support for raw material mining and refining
Regulations favouring local content in EVs

But they face several structural challenges:

Scale: It’s not enough to build one or two large plants. China’s advantage comes from dense industrial clusters with many overlapping suppliers and competitors.
Vertical integration: Chinese firms often own or control multiple stages – from raw materials to recycling. Recreating that integration elsewhere is complex and expensive. IEA+1
Cost of energy and labour: Electricity and labour can be more expensive in Europe and North America, raising manufacturing costs.
Know-how gap: It takes years of trial and error to reach the yields and quality levels Chinese factories now consider routine.

As a result, many new battery projects outside China still rely heavily on Chinese technology, equipment or partners – even when they’re politically framed as “diversification”.

The Next Technology Wave: Solid-State and Beyond

If other countries can’t easily catch up on current lithium-ion technology, maybe they can leapfrog with next-generation batteries.

Promising candidates include:

Solid-state batteries: Replace the liquid electrolyte with a solid one, potentially offering higher energy density and better safety.
Sodium-ion batteries: Use abundant sodium instead of lithium, offering lower cost and better performance in some conditions (though usually lower energy density).
New cathode chemistries with less reliance on cobalt or nickel.

However, China is not standing still here either. CATL, BYD, Korean companies like Samsung SDI, and US firms such as QuantumScape are all racing to commercialise solid-state technologies – and Chinese companies are deeply involved in sodium-ion and other emerging chemistries as well. ITIF+1

One wildcard is that solid-state batteries might not need exactly the same supply chain and manufacturing processes as today’s liquid-based lithium-ion cells. That could open space for new players with different strengths.

But as many analysts point out, having the world’s most experienced battery manufacturing workforce and infrastructure still gives China a strong head start in industrialising whatever the next technology turns out to be.

Geopolitics, Tariffs and the Future of China EV Battery Dominance

China EV battery dominance is no longer just a business story; it’s a geopolitical flashpoint.

The European Union and the United States have launched investigations and imposed tariffs on Chinese EVs, citing unfair subsidies and national security concerns. International Finance+1
Governments around the world worry about relying too heavily on batteries and materials processed in China for critical infrastructure and transportation.
At the same time, many Western automakers remain heavily tied to Chinese supply chains because alternatives are more expensive or not yet available at scale.

China is responding by:

Expanding its battery manufacturing footprint overseas – for example, building plants in Europe or Southeast Asia to get closer to customers and work around tariffs. Reuters+1
Tightening export controls on certain battery technologies and materials, adding another layer of strategic leverage. Le Monde.fr+1

The global battery landscape is increasingly shaped by a tension between economic efficiency (which favours Chinese suppliers) and strategic diversification (which pushes other countries to invest in their own capabilities even at higher cost).

What China EV Battery Dominance Means for the Net-Zero Race

From a climate perspective, China EV battery dominance is both a blessing and a risk.

The Upside

Without China’s rapid ramp-up in battery capacity, EVs would almost certainly be more expensive and less accessible worldwide today.
Fast-falling battery prices, driven largely by Chinese production, have made many EVs in China cheaper than comparable combustion vehicles. IEA+1
China’s manufacturing scale is helping push the global energy system away from fossil fuels faster than it otherwise could.

In other words, if you care about hitting net-zero targets by mid-century, China’s role as a battery powerhouse is hard to replace.

The Risk

Over-reliance on a single country for critical technologies is politically and economically risky.
Bottlenecks or political disputes could affect global EV supply, just as gas pipeline disputes once disrupted energy flows in Europe.
Countries may be reluctant to fully commit to electrification if they feel their supply chains are vulnerable.

The most realistic path forward may not be “replacing” China EV battery dominance, but balancing it:

Building complementary battery and EV industries in other regions
Collaborating with Chinese firms while also developing local expertise
Investing heavily in research to ensure the next generation of battery technology is more globally distributed

Conclusion: A 20-Year Head Start That’s Hard to Erase

China EV battery dominance is the product of:

A long-term national strategy that treated EVs as a strategic industry
Massive, targeted subsidies linked to technical performance standards
A protected early-stage domestic market that gave local firms room to grow
Vertical integration across the entire value chain, from raw materials to recycling
A huge pool of practicing engineers and world-class manufacturing know-how
The rise of giants like CATL and BYD, whose scale and cost advantages are hard to match

Other countries can, and will, build their own battery industries. Some may succeed in specific niches or technologies. A breakthrough in solid-state or other alternatives could open new windows of opportunity.

But given China’s 20-year lead, deeply embedded supply chains and unparalleled industrial ecosystem, there is no realistic scenario in the near term where its central role in EV batteries simply disappears.

For the foreseeable future, the world’s road to net-zero will run through factories in Ningde, Shenzhen and dozens of other Chinese cities – the heartland of China EV battery dominance.