The Demise of the Global ICE Industry China’s Stunning Role in Leading the BEV Revolution
The Demise of the Global ICE Industry China’s Stunning Role in Leading the BEV Revolution Published online by Cambridge University Press: 22 October 2025
Arie Lewin， Martin Kenney，El (Emily) Shu and Liang Mei
Overview
The Demise of the Global ICE Industry examines the historic transformation of the global automotive landscape as the internal combustion engine (ICE) era gives way to the battery electric vehicle (BEV) revolution—driven primarily by China’s rapid rise to leadership. The study highlights how a combination of strategic government policy, entrepreneurial dynamism, and technological innovation enabled China to become the epicenter of the global EV ecosystem.
Key Developments
- Policy as Catalyst: Beginning in the late 1990s, China’s five-year plans identified “new energy vehicles” (NEVs) as a strategic industry. The government backed R&D, pilot programs (“Ten Cities, Thousand Vehicles”), and large-scale subsidies that stimulated both public and private investment.
- Bottom-Up Entrepreneurship: Local governments and private startups—most notably BYD, NIO, and CATL—responded with aggressive innovation and competition. This interprovincial race accelerated learning, scaled production, and drove prices down.
- Full Supply Chain Integration: China built a vertically integrated EV ecosystem—from lithium mining and battery cell manufacturing to vehicle assembly and recycling. By 2024, Chinese firms controlled over two-thirds of global EV battery production.
- Affordability Breakthroughs: Models like the $4,000 Wuling Hongguang Mini EV redefined the market, making electric mobility accessible to the masses. BYD’s “blade battery” and e-platform 3.0 further enhanced cost, safety, and performance.
Global Impacts
- Market Leadership: In 2024, China sold more EVs than the U.S. and Europe combined. Ten of the world’s top twenty EV producers were Chinese.
- Export Expansion: Chinese automakers have become the world’s largest vehicle exporters, entering markets in Southeast Asia, Latin America, Africa, and Europe.
- Western Response: Traditional automakers—VW, BMW, Mercedes, and Toyota—are scrambling to realign strategies. Many now invest in or partner with Chinese EV firms to remain competitive.
- Technology Power Shift: Chinese manufacturers dominate the most value-added segment— batteries—while U.S. and European firms lag behind in scale and innovation.
Economic and Technological Implications
- Cost Parity & Performance: Battery costs fell from $180/kWh in 2022 to $115/kWh in 2024 and are projected to hit $82/kWh by 2026, ensuring EVs achieve cost parity with ICE vehicles.
- Industrial Disruption: As EV adoption surpasses 50% of new sales in China, the ICE ecosystem— fuel stations, parts suppliers, and repair networks—is becoming obsolete.
- Strategic Competition: The U.S. Inflation Reduction Act and similar policies aim to counter China’s dominance, but high tariffs and fragmented Western responses have yet to slow China’s lead.
Conclusions
China’s BEV revolution represents a technological and geopolitical inflection point. Through coherent policy, market experimentation, and massive scaling, China transformed itself from a follower in automotive technology to a global leader in green industrial innovation. The EV industry is now the cornerstone of a broader energy transition—with batteries, renewables, and clean manufacturing at its core.
The authors conclude that this transition could define the next global economic cycle (Kondratieff wave), positioning China not only as the world’s manufacturing hub but as the center of the 21st- century clean technology economy.
Key Takeaways
- China’s state–market hybrid model enabled unparalleled speed and scale in EV adoption.
- Battery innovation is the decisive technology shaping industrial power.
- The ICE industry’s decline is irreversible; the transition to EVs is global and accelerating.
- The EV revolution is both an industrial transformation and a geopolitical realignment.
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