IEA: Why China Leads Global Electric Vehicle Exports

The global automotive industry faces a fundamental restructuring of its supply chains as electric vehicle (EV) adoption accelerates and manufacturing power shifts eastward.

According to the International Energy Agency (IEA) report, What Next for the Global Car Industry, these changes could redefine how materials, components and finished vehicles move across global networks.

Global car sales reached approximately 80 million units in 2024, with growth driven predominantly by hybrid and electric vehicles, which accounted for approximately 30% of the increase.

The IEA data suggests that EV market share could exceed 40% by 2030, accelerating the need for supply chain transformation.

China dominates manufacturing capacity

Global sales of pure internal combustion engine (ICE) vehicles have declined by 30% since their peak in 2017, reshaping traditional automotive supply networks built around ICE component flows.

China and other emerging economies now represent more than half of global car sales, an increase of 20% since 2000. This geographic rebalancing has profound implications for supply chain routing and regional distribution strategies.

China's manufacturing footprint has expanded dramatically, with car production more than doubling between 2010 and 2024. The country now accounts for 40% of global car manufacturing, compared to Europe and North America's contribution of 15% each.

In 2024, China became the world's largest car exporter, surpassing the European Union. The IEA estimates that roughly 70% of EVs sold globally are produced in China, concentrating a significant portion of the EV supply chain within one geographic region.

"The global car industry is a cornerstone of many national economies, directly employing more than 10 million people worldwide," says Fatih Birol, Executive Director at the IEA.

"The market for cars is one of the largest for a single product and cars are the single largest source of global oil demand today."

Supply chain implications

The structural shifts highlighted by the IEA are reshaping how and where value is created across automotive supply networks.

Automotive manufacturing continues to operate in regional clusters, with the sector accounting for around 6% of global steel demand and 17% of aluminium demand.

Shanghai hosts 26 battery plants representing more than 5% of global capacity, while Detroit and Nagoya maintain limited battery manufacturing footprints. This geographic divergence creates distinct supply chain ecosystems with different sourcing requirements.

Chinese firms control around 80% of battery-related manufacturing capacity, whilst legacy ICE components remain dominated by suppliers in Europe, Japan, Korea and North America.

Producing cars in China costs less than in advanced economies, especially for EVs, largely due to large-scale manufacturing and deep vertical integration. Lower costs for components account for nearly 40% of the manufacturing cost gap for EVs, with average battery cell prices more than 30% lower than in Europe and more than 20% lower than in the United States.

Batteries have emerged as the key differentiator in regional supply chain structures. The European Union imports a far higher share of battery components than engines, while China and Japan retain integrated supply chains across both technologies.

All supply chain, sustainability, Scope 3 and net zero leaders should attend:

• Procurement and Supply Chain LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Procurement and Supply Chain LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Sustainability LIVE, these events brings together CSCOs, CSOs and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.

Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

Reshaping automotive supply networks

Accelerating the transition to EVs requires supply chain strategies that balance efficiency with resilience and sustainability. According to the report, there are no easy responses for incumbent manufacturers to the challenges posed by major shifts in global car markets.

Creating dependable, mass-market demand through measures such as EV sales targets could help countries with large ICE manufacturing bases achieve economies of scale in new supply chains and unlock investment as production shifts.

Scaling domestic battery manufacturing is equally critical, with partnerships to share early-stage risk, targeted skills development and the creation of local ecosystems strengthening resilience through the start-up phase.

Sustainability outcomes could be improved by prioritising the most cost-competitive battery chemistries near vehicle assembly centres, reducing transportation costs and emissions, whilst sustaining research and development to remain at the technological frontier.

Securing diversified and responsible supply chains for critical minerals is deemed essential to avoid near-term shortages and reduce long-term risk, supported by international cooperation, increased recycling and regulatory frameworks that encourage local supply.

Finally, minimising energy costs in energy-intensive stages such as materials processing and battery component manufacturing could be achieved through effective electricity market design and power purchase agreements that lower emissions whilst improving cost stability across the supply chain.