China's Dominance in the Global EV Supply Chain: Strategic Investments and Global Expansion of EV and Battery Manufacturers

China's electric vehicle (EV) and battery manufacturers have cemented their leadership in the global clean energy transition, driven by aggressive strategic investments, technological innovation, and a calculated response to geopolitical headwinds. According to reports, Chinese companies control over 68.9% of global EV battery installations and 69% of the EV battery market, with firms like Contemporary Amperex Technology Co., Ltd. (CATL) and BYD leading the charge. This dominance is underpinned by a dual strategy: securing raw material supply chains and establishing localized production hubs to bypass trade barriers. For investors, the trajectory of these firms-and their global expansion-offers both high potential and complex risks.

Strategic Investments: Rewiring the Global EV Supply Chain

Chinese EV and battery manufacturers have poured over $143 billion into foreign ventures since 2014, with 2025 marking a pivotal year for regional diversification.

CATL, the world's largest battery producer, has built or announced plants in Germany, Hungary, Indonesia, and Spain, while BYD is constructing a $1 billion factory in Indonesia and a passenger vehicle plant in Hungary. These investments are not merely about manufacturing but about securing the full value chain-from raw materials to finished vehicles. For instance, CATL's $6 billion battery plant in Karawang, Indonesia, announced in late 2025, aims to leverage Southeast Asia's mineral resources and favorable trade policies to reduce logistics costs and avoid Western tariffs.

Partnerships with European automakers further illustrate this strategy. CATL's collaboration with Stellantis in Spain and BYD's expansion in Hungary highlight how Chinese firms are embedding themselves into local supply chains. In December 2025, CATL also signed a $346 million agreement with NIO to expand battery-swapping networks, adopting its Choco-Swap standards to enhance interoperability and efficiency. Such alliances not only mitigate regulatory risks but also align Chinese technology with regional consumer preferences.

Technological Edge and Market Differentiation

While cost leadership has historically driven Chinese EV growth, 2025 marks a shift toward technological differentiation. CATL's 5-minute charging technology for a 320-mile range and the widespread adoption of lithium iron phosphate (LFP) batteries have set new industry benchmarks. Meanwhile, BYD's 263% surge in European battery usage underscores its ability to compete on innovation rather than price alone. Chinese firms are also prioritizing intelligent driving systems and autonomous technologies, positioning themselves as leaders in the next phase of automotive evolution. This focus on R&D is supported by state-backed policies like "Made in China 2025," which aim to reduce reliance on foreign technology and establish Chinese firms as global leaders in high-tech manufacturing. For investors, this represents a long-term bet on China's ability to dominate not just production but also the intellectual property underpinning the EV revolution.

Navigating Geopolitical Challenges

Despite their momentum, Chinese EV manufacturers face significant geopolitical hurdles. The U.S. imposed 100% tariffs on Chinese EVs in 2025, while the EU levied countervailing duties averaging 20.8% to counter perceived unfair subsidies. These measures have forced companies to adapt by shifting production to markets like Brazil and Southeast Asia. For example, BYD's fourfold increase in overseas sales in 2024 was partly driven by its pivot to Southeast Asia and Latin America.

The U.S. also introduced the Connected Vehicles Rule, banning imports of connected vehicle components linked to China and Russia. This has compelled automakers like General Motors and Tesla to phase out Chinese-sourced parts, creating short-term volatility for suppliers. However, Chinese firms are countering by securing long-term procurement deals and investing in local production. For instance, CATL's partnerships with European automakers ensure continued access to key markets despite regulatory friction.

Future Outlook: Southeast Asia as the New Frontier

Southeast Asia is emerging as a critical battleground for Chinese EV dominance. Countries like Indonesia and Thailand are becoming hubs for localized production, with Chinese firms securing access to nickel and cobalt reserves to insulate against supply chain disruptions. By 2026, BYD's Indonesia factory is expected to operationalize, further solidifying the region's role in China's global strategy.

For investors, the key risks lie in geopolitical tensions and regulatory shifts, but the opportunities are equally profound. Chinese firms' ability to integrate into global supply chains, coupled with their technological edge, positions them to outpace competitors in South Korea and Japan, who have seen declining market shares. As the IEA notes, China's EV industry is reshaping the global automotive landscape, compelling traditional automakers to accelerate their own innovation cycles.

Conclusion

China's dominance in the EV supply chain is a product of strategic foresight, technological agility, and geopolitical adaptability. While trade barriers and regulatory scrutiny pose challenges, Chinese manufacturers are leveraging localized production, partnerships, and upstream resource investments to maintain their lead. For investors, the sector offers high-growth potential but requires careful navigation of macroeconomic and policy risks. As the world transitions to clean energy, China's EV firms are not just participants-they are architects of the new global order.