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China Overtakes U.S. as Global EV Market Leader with 3.5 Million Cars Sold in 2025

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  Published in Automotive and Transportation on Tuesday, December 23rd 2025 at 11:52 GMT by Forbes
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China’s Auto Industry: Bad News for the U.S.—Perhaps for China Too?
Forbes – 23 December 2025, by Frank Lavin

The piece opens by framing the current trajectory of China’s automobile sector as a seismic shift that is reshaping global auto politics, trade dynamics, and the very architecture of the industry. Lavin argues that while the U.S. is already feeling the tremors, China’s own ambitions and policy choices could spell trouble for both sides.

1. The Rise of China’s EV Market

Lavin begins with hard numbers: China’s electric‑vehicle (EV) sales climbed to roughly 3.5 million units in 2025, a 23 % year‑over‑year increase that dwarfs growth rates seen in the United States and Europe. Companies such as BYD, NIO, Xpeng, and the Chinese‑manufactured version of Tesla’s Model 3 have become household names, and the country has overtaken the U.S. as the world’s largest EV market. The author cites a Forbes‑exclusive interview with a former General Motors executive who notes that the U.S. automaker’s production plans in China are now being “scrutinized” by the Biden administration as part of a broader scrutiny of the U.S.–China trade relationship.

The article also highlights the sheer scale of China’s battery manufacturing: with over 100 gigawatt‑hour (GWh) of battery production capacity announced in 2025, China is expected to supply 70 % of the world’s battery cells by 2030. This dominance, Lavin suggests, has already begun to influence global supply‑chain decisions and has made the U.S. increasingly reliant on Chinese battery materials.

2. The U.S. Auto Industry’s Growing Dependence on China

While the U.S. auto industry has historically been seen as a bastion of manufacturing, the article underlines how the rise of China’s auto ecosystem has shifted that narrative. The author points out that by 2025, about 20 % of the parts used in U.S. new‑vehicle production were sourced from Chinese suppliers—an uptick from roughly 12 % in 2020. Among the most significant of these are high‑precision electronic components and battery modules.

Lavin references a 2024 report by the U.S. Department of Commerce that identified “critical vulnerabilities” in the supply chain, especially in the context of emerging technology such as autonomous driving systems. The report warned that a sudden policy shift—like the imposition of tariffs on high‑tech components—could cause ripple effects across the entire U.S. auto ecosystem.

3. Potential Retaliation: Tariffs and Trade Tensions

One of the most alarming points in the article is the looming threat of U.S. tariffs on Chinese EVs. The author notes that President Biden’s administration is currently in talks with the Treasury to set a tariff threshold of 25 % on imported electric cars if the “national security interests” are deemed compromised. The piece underscores that China’s own trade policy has been increasingly protective, with tariffs on certain high‑tech goods already in place to safeguard domestic industries.

Lavin cites a recent Bloomberg interview with a policy analyst who warns that “tariff wars in the automotive sector could become a new frontier for trade policy, especially given the strategic importance of battery technology.” The analysis suggests that U.S. automakers that have built significant supply‑chain relationships in China could face sudden cost spikes, while Chinese automakers might be forced to pivot to other export markets, perhaps the EU or Southeast Asia.

4. China’s Counter‑Strategies and Domestic Incentives

The article provides a balanced view by detailing China’s own strategies to consolidate its dominance. China’s government has continued to offer generous subsidies to EV buyers—estimated at 100 % of battery costs for certain models—and is investing heavily in charging infrastructure, with over 300,000 public chargers by the end of 2025. In addition, the “Made in China 2025” plan includes targeted R&D grants for autonomous driving technologies, signaling that China aims to stay ahead not just in volume but in technological sophistication.

Lavin points out that China’s push to bring EV production closer to home is also a strategic move to mitigate potential sanctions. By increasing domestic battery production capacity, the country hopes to reduce its exposure to import tariffs and to assert greater control over critical raw materials such as lithium, cobalt, and nickel.

5. The Global Repercussions

The Forbes piece does not limit itself to a U.S.–China narrative. Lavin discusses the broader global market, especially the EU, which has already enacted a “green tariff” that imposes duties on imported EVs until domestic production reaches a certain threshold. The author cites an article from Financial Times that explains how the EU’s policy has already created a de facto “EV tariff” on Chinese imports, prompting Chinese automakers to consider expanding their manufacturing footprints to Europe.

Another link the article follows leads to a research paper by the International Energy Agency (IEA), which forecasts that the global EV market could grow at a compound annual growth rate (CAGR) of 35 % through 2030. The IEA report emphasizes the importance of battery recycling and raw‑material supply‑chain resilience—a point that aligns with Lavin’s argument that both China and the U.S. need to diversify beyond their current dependency on one another.

6. The Bottom Line: A Double‑Edged Sword

In its conclusion, the article argues that while China’s auto industry’s meteoric rise is a boon for global electric mobility and environmental goals, it simultaneously introduces new trade friction points that could undermine both nations’ automotive futures. Lavin suggests that the U.S. needs to accelerate its own EV production, invest in domestic battery manufacturing, and negotiate trade agreements that balance protectionism with market openness.

Conversely, China’s focus on maintaining subsidies and protecting its nascent EV ecosystem could backfire if international pressure mounts. The piece ends with a cautionary note: “The world’s auto industry is no longer a zero‑sum game. In this rapidly evolving market, any country that attempts to “win” by cutting out the other risks losing the race altogether.”

Key Takeaways

1. China dominates the EV market with 3.5 million units sold in 2025 and a projected 70 % share of global battery cells by 2030.
2. U.S. automakers rely heavily on Chinese components, especially for electronics and battery modules.
3. Tariff threats loom: the Biden administration is considering a 25 % tariff on imported EVs if national‑security concerns are met.
4. China’s counter‑measures include generous subsidies, charging‑infrastructure expansion, and investment in domestic battery and autonomous‑driving tech.
5. Global implications: the EU’s green tariff and IEA’s projections underscore the need for diversified supply chains.
6. Both sides risk mutual harm if trade tensions worsen; collaborative, balanced policy solutions are essential for a sustainable auto future.

In short, Frank Lavin’s article paints a vivid picture of an industry in flux—an industry where the shift to electric cars is not just a technological transformation but a geopolitical one, forcing the U.S. and China to rethink their strategies and their interdependencies.