A quiet beginning sparks a global shift
China had only two EV battery makers in 2005. Twenty years later, it produces over three-quarters of the world’s lithium-ion cells. The journey began with sleek electric buses at the 2008 Beijing Olympics, which carried visitors between venues. Those buses ran on lithium-ion packs and marked China’s first major step into EV battery production. This Olympic project created early momentum and laid foundations for China’s later dominance. Beijing had planned this push since winning the Olympic bid in 2001. But developing EV batteries for the Games challenged Chinese labs and factories. Researchers at the Beijing New Materials Development Centre studied the sector and found only a tiny industry. Only two Chinese firms built EV batteries at that time. Their first national battery conference in 2005 drew just 200 people.
New players enter an empty field
CATL existed only as a department inside a Japanese-owned gadget battery firm. BYD had just entered the auto sector after making phone batteries. Two decades later, China leads an industry vital for global net-zero targets. It now hosts six of the planet’s ten biggest battery producers and delivers most lithium-ion batteries worldwide. Analysts link this rise to a huge shielded market and strong state coordination. Consumer subsidies and mandated EV production gave further support. Yet policy tells only part of the story. Chinese firms mastered mass production and tight cost control. Advisors say local companies show strong survival instincts and explore new ideas to stay competitive. This mindset helped the sector grow continuously.
Global science forms the base
The origins of lithium-ion science lie abroad. Three chemists created the early breakthroughs and later shared a Nobel Prize. Their work led to the first commercial lithium-ion battery in 1985. Sony brought these batteries to market in 1991, and Nissan released the first electric car using them five years later. Japan led global production for years while South Korea pushed hard to challenge it. Japanese companies held 93% of the global market share by 2000. South Korea took the top spot in 2011 when Samsung SDI surpassed Panasonic. China saw an opening because its own EV battery firms remained small at the time. Mengguli and Wanxiang supplied batteries for the Beijing Olympics and later for the 2010 World Expo. China had already planned a long strategy by then. A national science plan published in 2006 listed new-energy vehicles as a priority. It also highlighted rechargeable automotive batteries as a key technology.
China sets its industrial strategy
China aimed to upgrade its manufacturing by 2020. It wanted to move beyond cheap labour and compete through innovation. In 2009, after the successful Olympic bus project, China moved to remodel its auto industry. Policymakers believed EVs offered a chance to leapfrog Western rivals. They saw an industry with no clear global leader. A national plan guided local governments to build supply chains and charging networks. It pushed domestic players to develop EV technologies, including batteries. China launched a large e-bus programme the same year called “10 Cities and Thousand Vehicles”.
Slow US progress shapes China’s push
Analysts say China also watched the US struggle with EV policies. California promoted zero-emission vehicles in the 1990s. The policy pushed carmakers to develop EVs, but later pressure from oil and auto groups weakened these rules. US support for EVs rose again in the 2000s, yet many early startups failed during the 2008 financial crisis. Investment dried up and several firms sold their technology. Many of them were bought by Chinese companies, including battery maker A123. China responded to the global crisis with a massive stimulus plan. Part of it funded projects that cut emissions and boosted interest in renewables. Reports at the time said this support triggered a national surge in battery and EV development.
A snowball gathers speed
The period between 2012 and 2020 proved critical for Chinese battery makers. A state roadmap set clear EV targets and required technical progress from firms seeking support. In 2013, buyers across China gained access to EV purchase subsidies. Government backing grew sharply. Central and regional authorities spent billions on subsidies and tax rebates. Market growth followed instantly. Production and sales of new-energy vehicles tripled in 2014 and 2015. Their market share jumped from 1.3% in 2015 to 41% in 2024. A decisive boost arrived in 2015 when China restricted subsidies to EVs using batteries from approved suppliers. All approved companies were Chinese. Foreign firms with factories in China suddenly lost access to buyers seeking subsidies. Many Chinese automakers switched to CATL and other qualified domestic suppliers. The rule lasted four years and changed the market.
Domestic giants rise at speed
New demand pushed CATL to the top of the global rankings in 2017. CATL has remained number one ever since. China’s ambitions continued under the “Made in China 2025” plan. The policy aimed to place the country at the forefront of advanced manufacturing. New-energy vehicles became a key sector. China added a “dual-credit” policy in 2017. The rule forced automakers to build EVs to offset their petrol cars. The EVs then needed Chinese batteries to qualify for consumer incentives. Analysts say this trapped every automaker into using domestic battery suppliers. This protected market helped CATL collaborate with advanced Western carmakers. These partnerships rapidly increased its technical skill. China’s industrial strategy also relied on intense competition. A continuous cycle of “horse races” encouraged firms to outperform each other. Analysts say this model helped China move quickly from lab ideas to mass production.
The machinery of dominance
Experts say China’s edge lies in supply chains and manufacturing know-how. Leading firms such as CATL and BYD rely on vertical integration. They partly or fully own many suppliers. This structure gives them lower costs and secure supply. Their manufacturing skill is equally important. EV batteries contain hundreds of cells that must match precisely. One weak cell affects range and safety. These requirements demand huge automated plants with strict controls. CATL excels at this and held nearly 40% of the global market in 2024. Analysts say CATL makes high-quality batteries at lower cost while keeping massive output. Constant innovation strengthens China’s lead. BYD launched its “blade battery” in 2020. It used cheaper materials and improved earlier designs. The blade battery delivered better safety and performance and soon changed the industry standard. A large pool of trained engineers supports this rapid progress. Chinese firms employ thousands of technical experts who bridge lab research and factory practice. They understand production deeply and upgrade designs quickly. This skill keeps costs low and performance high.
Can rivals catch up?
China now dominates every major link in the battery supply chain except some areas of raw minerals. It holds almost 85% of global production capacity. North America has 5%, while Europe has 7%, according to data cited by global researchers. Experts say rival nations will struggle to match China’s scale. Industrial clusters and integrated supply chains are hard to recreate. Chinese firms already hold global commercial momentum. Their products remain cheaper, stronger and easy to source. Analysts argue that scale alone makes catching up extremely difficult. Some say other countries still have a chance with next-generation technologies. Solid-state batteries may open new space for competition. These designs use solid electrolytes and may reshape supply chains. Several companies worldwide are working on them. But building competitive factories remains hard for anyone relying on today’s Chinese-dominated supply system. Analysts say nations without deep manufacturing experience will face major obstacles. Others argue that cooperation with Chinese firms may help new entrants grow. They see shared expertise as the fastest way to scale new technologies. Some believe China’s twenty-year head start makes its dominance nearly permanent. They argue no country will match China’s manufacturing strength soon. Many expect China to stay far ahead.
