It’s fair to say China dominates in electric vehicle sales. The country is the world’s biggest consumer of electric cars and has dozens of automakers competing in the space. Last year, Chinese companies sold about 9.5 million EVs and plug-in hybrid cars.

But the industry faces mounting trade pressures. The Biden administration imposed a 100% tariff on Chinese EVs, which President-elect Donald Trump is expected to continue. Meanwhile the European Union recently raised tariffs up to 45%, citing concerns that Chinese government subsidies give its companies an unfair advantage.

Subsidies certainly help, but there are other factors giving Chinese EVs an edge. Marketplace’s Meghan McCarty Carino spoke with Marketplace’s China correspondent Jennifer Pak about how those factors could keep Chinese EV makers competitive, even in a more restrictive global market.

The following is an edited transcript of their conversation.

Jennifer Pak: There are multiple factors, and different people will emphasize different points to it. So one of the things is China has a complete supply chain. It has cheap labor. There’s fierce competition amongst all of the Chinese companies here. There’s a big demand, a big market and subsidies. According to a consultancy, Automobility, they say that batteries account for over half of the cost of the EVs. So if you can imagine, China controls the processing of the raw materials all the way down to the assembly, it means you can negotiate good prices, especially if you order in massive quantities. So if you, you know, have more volume, then prices per unit comes down. And then there’s also cheap labor. So for example, in the U.S. last year, it was $28 per hour for an autoworker, whereas when we went to Central China, at one of the BYD factories in Changsha, we spoke to assembly workers who said they earned about $1,000 a month, which is pretty good for factory work in China, but because of the amount of overtime they have to put in, it works out to at best $3.60 an hour. So that’s quite a difference from $28 an hour.

McCarty Carino: And when we say that Chinese EVs are cheaper, we should specify, I mean, there are several models that are less than $20,000, right?

Pak: Yes, for sure, but a lot of the companies want to get a higher profit margin, so in fact, they want to sell the higher end ones. And what we’ve been told by experts is that even if they compare to their relative peers, you know, it’s still cheaper because they have better features, or they put more features into the car.

McCarty Carino: As it becomes kind of increasingly difficult to sell to Western markets, do you think these competitive advantages hold up down the road?

Pak: Yes, for the simple reason about the battery, that supply chain being locked in China right now is really essential to keeping prices low. The labor cost is less so because actually wages have become higher and higher, and factories are becoming more automated, so that’s becoming less of a factor. But the other thing that we were talking about is value for money, right? So Chinese EV companies are not really looking to export its cheapest models. Certainly, certain countries would want that, but what they want is to get higher profit margins. And China has an advantage in that it doesn’t just manufacture EVs, it manufactures quite a lot of things that go into the EVs. Like, for example, I went into one of the cheaper models. It was $18,000, it’s the BYD Qin, and it’s super basic, so basic that in the back there’s no air vents, there’s no entertainment system, but now the replacement model comes automatically with an app where you can remotely start the air conditioning. It has some voice control functions. So it’s these sort of “braggable” features in an EV which would prompt consumers to buy and I think as we go further down the road and as more companies start producing EVs, I think that might be one of the factors and China is doing it pretty well. So we’re not talking about just cheap but maybe better value for money, might be a better term.

McCarty Carino: Most Chinese EVs are being sold in China. It is by far the biggest consumer of EVs globally. But what’s the experience like driving an EV in China, how is the infrastructure for charging?

Pak: So right now, especially in all of the mega cities, most, if not all of the taxi fleets have turned into electric vehicles. Ride share platforms as well have also basically forced drivers to change to EVs, like they’ll put a time limit on gas powered cars, like how many years you can have on that car before you have to switch over. So actually, in the whole consumer experience, it’s very common to take electric vehicles, and oftentimes you wouldn’t even really know, because on the interior, especially the cheaper models that you get in the taxis, it just looks like a normal car. It’s just pretty bare bones. And you don’t notice much about the charging facilities, because they are everywhere. As of the end of 2023, there were 8.6 million, and as of the end of October this year, we’re now getting close to 12 million, so they’re building the infrastructure rapidly.

More on this

We can’t talk about Chinese EVs without mentioning the biggest name in the game: BYD, which stands for Build Your Dreams. The company is frequently spoken of in the same breath as Tesla. And earlier this year BYD actually reported higher quarterly revenues than Tesla for the first time.

Tesla still led in net profits and sales of pure electric vehicles. BYD also sells plug-in hybrid cars so their total unit sales are not completely apples to apples.

But speaking of Tesla, Jennifer reminded us that Tesla was also a beneficiary of Chinese subsidies thanks to its Shanghai Gigafactory. And Tesla’s easier access to China’s “complete supply chain” as Jennifer put it is also an important reason why the company is still at the top.