China: Charging the Road Ahead

No. While China is a leading EV exporter, we believe what matters more in electric vehicles is who controls the materials, the chemistry, and the manufacturing infrastructure that makes the cars possible. In our view, understanding how this supply chain operates—from raw materials through final components—is critical to finding the most interesting investment opportunities across the auto and auto supply industry.

China’s structural supply chain advantage is most entrenched in the EV’s battery pack, starting from the input materials through EV battery production. At the start of the supply chain, Chinese firms control over 70% of global lithium refining, 85% of cobalt processing, and more than 65% of cathode and anode production capacity—key input materials to EV batteries. Further down the supply chain, the two largest EV battery makers are Chinese companies CATL and BYD. Together, these companies accounted for 55% of global EV batteries installed into cars produced by auto manufacturers around the world.

The opportunity also extends beyond batteries. Across the component layer, several Chinese suppliers have become the top supplier for certain parts of EVs. Minth Group, for example, leveraged its expertise in lightweight aluminum parts production and is now the leading battery housing supplier globally, working with European, American, and Asian automakers alike. These are the kinds of companies on which we spend significant time: those that are deeply embedded in the global auto supply chain, carrying real competitive moats, and often under-researched by investors focused on the headline automakers. 

Elevated energy prices and supply uncertainty have renewed focus on EVs as countries and consumers look for greater energy independence from volatile fuel markets. In addition, battery technology is advanced enough that key barriers to adoption are fading. We believe this dynamic could support global adoption in the years ahead.

Chinese manufacturers play a central role in this growth. Despite tariffs and trade barriers, we believe they offer compelling value on both price and quality, supported by strong manufacturing scale. According to the company, BYD’s gross margin per vehicle sold outside China is roughly double its domestic margin—reflecting both intense competition at home and a strategy of competing on quality as well as cost. BYD’s newest battery and “Flash Charger” charging system can recharge a car to nearly 70% in about five minutes, similar to the time required to refuel a gas car—removing the charge-time anxiety barrier to entry.

At the same time, many Chinese EV and component companies are expanding manufacturing globally. Facilities across Southeast Asia, Europe, the Middle East, and Latin America allow them to serve local markets while supporting regional supply chains. Chinese EV and battery firms invested about $143 billion in overseas ventures between 2014 and 2025, and in 2024 spent more on supply chain development abroad than at home for the first time. Recent examples include CATL’s profitable Germany plant and new facilities in Hungary and Spain, as well as BYD’s Brazil factory serving the Latin American market.

We believe this “glocal” strategy—global scale combined with local production—strengthens the long-term investment case for leading Chinese EV companies.

We believe the value chain—including China’s firm place along its entirety—and the investment opportunities associated with it extend well beyond China’s borders. China built its EV dominance partly by embedding itself in the critical mineral supply chains of other emerging markets: lithium in Chile and Argentina, cobalt in the Democratic Republic of the Congo, nickel in Indonesia, and graphite across East Africa, to name a few. As that supply chain continues to globalize, we are seeing processing and refining capacity develop in these geographies. These are markets we know well and we consider the build-out of their infrastructure as one of the more consequential long-term growth stories to follow.

Demand dynamics are also broadening the opportunity set. Beyond passenger vehicles, EV technology is expanding into two‑ and three‑wheelers, commercial fleets, and energy storage systems—applications that rely on the same battery chemistry and supply networks developed over decades. Adoption across Southeast Asia, Latin America, and parts of Africa is in the early stages but accelerating.

The key distinction is between where production occurs and who controls the underlying capabilities. While the supply chain is becoming more geographically dispersed, Chinese firms remain deeply embedded through ownership stakes, processing expertise, technology, and long‑term offtake agreements. In that sense, globalization is not eroding China’s advantage—it is often the mechanism through which that advantage is being extended abroad.