China Grabs Even Larger Shares of Electric Vehicle, Battery, Other Tech Markets

The Australian Strategic Policy Institute (ASPI) reported Friday that China is now the research leader in 19 critical high-tech fields, compared to only four for the United States.

China has taken the lead in key military sciences, including hypersonic weapons, and also in key “green” technologies such as electric vehicles and battery production, where China is steadily increasing its already dominant market position.

ASPI studied some 2.2 million academic papers published from 2018 to 2022 to reach its conclusion, discovering that China accounted for 80 percent of research output overall, including 73.3 percent of “high-impact research output for hypersonic detection, tracking, and characterization” and 56.9 percent of underwater drone research, including undersea wireless communications.

The competition was a little closer in the hotly contested field of artificial intelligence (AI), but China still had the lead in four of six AI-related fields ASPI studied, compared to two for the United States. China and the U.S. were roughly tied in research on quantum computing technologies.

Nikkei Asia noted in early September that China is aggressively expanding its share of existing high-tech industries, including electric vehicles and batteries:

The presence of Chinese companies is especially noticeable in the EV and related markets. Although Tesla in 2022 had the biggest slice of the EV market, 18.9%, three Chinese makers controlled a bigger combined share, 27.7%. Tesla’s share that year was 3.4 percentage points narrower than it was in 2021. BYD, meanwhile, captured the second largest share, 11.5%, up from 6.9%.

Four of the top five producers of insulators for lithium-ion batteries, used in EVs and other products, are Chinese companies commanding a combined share of 63%. Sinoma Science & Technology, which was outside the top five in 2021, ranked second with an 11% share.

In the market for lithium-ion batteries for EVs, BYD expanded its share to 14.4% from 7.7%. BYD and other Chinese makers together secured a share of more than 60%.

China is now “dominant” in the EV supply chain, and is opening plants for electric vehicles and batteries around the world, from Brazil to Germany.

Nikkei Asia judged it has become all but impossible for Western nations to “reduce their reliance on Chinese supply chains for EVs and other products.” Almost no one talks about “decoupling” from China any longer, and even strategies to “de-risk” by developing alternatives to China have become very modest in the markets China dominates most clearly, including EVs.

China fired some warning shots against its Western clients last week, denouncing a probe by the European Commission (EC) into Chinese EV subsidies as “protectionist” and a threat to economic relations. The EC fears China is using subsidies to flood global markets with its electric cars at artificially low prices.

“China will pay close attention to the EU’s protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese companies,” the Chinese Ministry of Commerce said, threatening to use the immense leverage granted by its domination of the supply chain against the Europeans if they take punitive action.