China’s electric vehicle industry: Government subsidies, production growth, and export strategy

Abstract

The global automotive sector is moving quickly toward sustainability, with China playing a pivotal role in this transformation. This study examines the strategic evolution of the Chinese electric vehicle (EV) industry, focusing on how government policy, production growth, and global export strategies connect. The main objective is to analyze how shifts from direct financial subsidies to market-oriented regulations influenced the international competitiveness of Chinese manufacturers. Using a mixed-methods research design covering the period from 2016 to 2024, the study combines logical induction with quantitative time-series and Pearson correlation analyses. Empirical data tracking domestic production, retail sales, export volumes, and subsidy outlays were gathered from the China Association of Automobile Manufacturers and official government reports, and then analyzed using GRETL software. The quantitative results reveal a clear shift within the industry, showing a negative correlation (r = -0.5357) between direct purchase subsidies and domestic EV sales. This inverse relationship points to a structural decoupling, meaning that market demand and sales continued to expand even as subsidies were systematically withdrawn. Furthermore, a very strong positive correlation (r = 0.9856) between domestic production scaling and international exports confirms that economies of scale are what now drive China’s global expansion. In conclusion, the study shows that the Chinese EV market has reached self-sustainability. The broader policy implications suggest that large-scale domestic production, vertical supply chain integration, and extensive infrastructure—rather than ongoing state handouts, serve as the actual engine driving global export competitiveness.