China’s growing impact on global new energy vehicle supply chains

China’s new energy vehicle (NEV) industry is set to revolutionize the global market. In 2023, China’s NEV production and sales accounted for over 60% of the global share. This industry is transitioning from “product export” to “brand export,” entering a new phase of “capacity export + industrial chain export.” Chinese NEV companies are establishing overseas factories in Thailand, Central and Eastern Europe, and Latin America to overcome export restrictions and enhance economic efficiency.

Global market landscape for NEVs

By 2030, China, Europe, and the United States are expected to dominate the global NEV market, with projected sales shares of 33%, 27%, and 20%, respectively. China, having developed a comprehensive electrification supply chain over the past decade, currently holds about 70% of the world’s battery production capacity. This extensive supply chain includes everything from raw material extraction to battery manufacturing and vehicle assembly.

Transition to brand export

Chinese enterprises are shifting from selling low-cost goods to exporting branded NEVs, significantly impacting supply chain management. Brand export demands higher product quality and consistency, driving improvements in quality control and supply chain transparency. Companies must forge long-term, stable partnerships with global suppliers and distributors to ensure the steady supply of raw materials and components. Establishing factories worldwide not only reduces transportation costs and time but also better adapts to local market demands.

Capacity export + industrial chain export

Chinese NEV companies are entering a new stage of “capacity export + industrial chain export.” Local production reduces reliance on cross-border transportation, lowering logistics costs and shortening transport times while meeting local market demands more effectively. This model requires a highly coordinated and integrated supply chain management system, optimizing production processes, improving efficiency, and mitigating supply chain disruption risks. Additionally, setting up factories in multiple countries diversifies supply chain risks, addressing market fluctuations or policy changes.

Supply chain core areas: Materials, batteries, chips, and software

The concentration of global lithium, cobalt, and nickel resources presents significant supply chain risks. By 2030, there are projected shortages of one million tons of lithium, 100,000 tons of cobalt, and over 200,000 tons of refined nickel. Companies need to diversify their supply chains by developing new sources, investing in underdeveloped resource-rich areas, and enhancing recycling and reuse.

Battery supply chains face sustainability challenges due to price fluctuations, investment risks, and significant technological breakthroughs. Global power battery demand is expected to reach 3,800 GWh by 2030, with battery-related trade and investment policies potentially leading to competition and trade disputes between nations. Automotive chip supply chains, characterized by high risk, uncertainty, and fragility, require robust strategies to prevent disruptions from geopolitical events or natural disasters.

Supportive policies

The recent policy directive jointly issued by China’s Ministry of Commerce, the National Development and Reform Commission, and the General Administration of Customs, among others, aims to bolster the healthy development of the new energy vehicle (NEV) trade. This initiative includes 18 policy measures across six key areas to enhance international operations, optimize logistics, strengthen financial support, promote trade activities, and foster a favorable trade environment. These measures are designed to help Chinese NEV companies manage their global supply chains more effectively by encouraging overseas R&D collaboration, improving logistics and transport management, optimizing credit support, and leveraging free trade agreements. This comprehensive approach aims to mitigate international trade risks, ensuring the stability and sustainability of supply chains while supporting the industry’s global expansion and advancement

Impact on global supply chains

The overseas expansion of Chinese NEV companies and the transition to brand export is reshaping global supply chains. Establishing local production facilities reduces dependency on long-distance logistics, lowers costs, and improves response times to local market demands.

China’s new energy vehicle industry, particularly in the field of autonomous trucks, is having a profound impact on global supply chains through its green supply chain practices. Autonomous trucks, powered by electricity, reduce carbon emissions and transportation costs while enhancing transport efficiency and reliability, and minimizing human error. Their ability to operate around the clock and adapt flexibly to scheduling needs boosts the supply chain’s responsiveness and adaptability. Leveraging intelligent management technologies, autonomous trucks enable more efficient supply chain operations and further cut down on CO2 and other pollutants, aligning with international environmental policies and sustainable development goals. These measures not only enhance corporate brand image but also drive technological innovation and the establishment of industry standards. Moreover, government support policies and the advancement of international cooperation are set to accelerate the adoption of autonomous driving technology and the green transformation of global supply chains.

Conclusion

China’s NEV industry’s transformation from product export to capacity and industrial chain export is significantly impacting global supply chains. By localizing production and diversifying supplier networks, Chinese NEV companies are creating a more resilient and efficient supply chain. Strategic resource management and technological advancements will support this growth. Supply chain professionals must stay informed about market trends, navigate export restrictions, and leverage

Author bio

Chunan Tong is a supply chain professional manager specializing in the automotive and technology supply chains, based in Shanghai. He holds the APICS Certified Supply Chain Professional (CSCP) certification and has received awards in the China National Supply Chain Competition, as well as a nomination for the SEDEX Supply Chain Award. Chunan Tong is also the vice president of the Shanghai chapter of the Supply Chain & Operations Manager Association (SCOM), which has a membership of 40,000 supply chain managers .

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