Representatives of eight Western venture capital firms have traveled to China and realized one thing: the West can’t compete in new energy. This phrase could be a ‘clickbaitero’ headline, but it is the experience that representatives of several companies told a few weeks ago to Bloomberg. And the truth is that it is nothing new either.
China has been consolidating a extraordinary domain in multiple clean energy sectors. It is something supported by industrial supremacy and significantly lower costs than those of its Western competitors, which has been evidently reflected in sectors such as electric car batteries or in sectors such as solar or wind energy.
In the Bloomberg article, some of the components of that peculiar Western ‘road trip’ through China wonder How European and North American competitors can compete (or survive) in sectors such as batteries and components of renewable energy sources.
The reason? The figures leave no room for doubt: China dominates batteriesthe wind turbinesthe solar panels, the electric vehicles and something even more important: the production chain and critical materials.
New energy mastery
Not so long ago, China had a massive problem within its borders: pollution that seriously harmed the health of its population. By adopting different measures, they have managed to reduce it significantly, achieving decarbonization objectives before the established dates. And much of the ‘blame’ is adoption of electric vehicles and energy sources that emit less CO₂ into the atmosphere.
It is not unusual to see news every so often about the progress of some of China’s macro energy projects, such as the ‘great solar wall‘, huge wind turbines or the construction of the new largest dam in the world which, in addition, will be a gigantic hydroelectric plant.
Such is the commitment to renewables that China has managed to the world depends on its technologywith Europe and the United States that cannot compete in the price of solar panels and with a so fierce competition between your companies that They have even had to sign agreements not to continue selling at a loss.
Since we are with solar, esteem that China reached 887 GW of solar capacity in 2024, installing about 270 GW in that year alone. This represents 55% of all new solar installations in the world last year, but they are not only dominating this segment. The percentages leave no room for doubt:
- China controls between 80% and 85% of the world’s solar panel manufacturing capacity and more than 95% of solar wafers.
- In wind turbines, they count with 60-70% dominance of global production and nine of the fifteen largest global manufacturers they are chinese.
- As for electric vehicles, they have control of 70% of global production. In 2024, they manufactured 12 million of the 17 million EVs in the world, and of their production, 11 were sold in the domestic market.
- Related to the three previous points, we have the manufacture of batteries. It is estimated that they control between 75% and 80% of the production of lithium-ion batteries and these are used to store new energy, but also for electric and hybrid vehicles.
The only technology where things are more even between China and the West is hydrogen. It is estimated that China dominates 53% of its production, while Europe (30%) and the United States (12%) would add 42%.
Mastery of the production chain (and a model that cannot be replicated in the West)
This dominance in production is evident, but beyond the data in the different sectors, there is another key that explains the power of Chinese companies. The country controls the rare earth productionalmost monopolistic way. The world depends on minerals and metals processed from rare earths, as they are critical in all technological sectors, but particularly in batteries and elements such as magnets that are used to create wind turbines.
Without going any further, The country processes 80% of the world’s lithium and produce 90% of the anodes and electrolytes present in batteries. For years, The West has delegated that production to China due to how polluting they are, but now Western companies have come face to face with a reality in which China has the upper hand. The United States has realized this: if they applied tariffs, China limited exports of rare earth metals.
Speaking of the United States, former Vice President Al Gore affirms that China’s supremacy in the energy transition will force many nations to establish closer ties with the country, describing, incidentally, the United States’ energy shift towards fossil fuels as “a tragedy.”
And to this control of the production chain is added the so-called “model 996“. This system emerged in the chinese technology industryparticularly in companies like Huawei or Alibaba, and basically implies: I work from 9 to 9 six days a week.
Considered a form of modern slavery, companies justified and defended as the method of matching Western technology companies in record time, but the mental health cost (and even suicides) was so enormous that the Chinese Ministry of Human Resources declared it illegal in 2021.
Companies are required to comply with the law, but it has been denounced that there are still technology companies that continue with these practicesand added to all the above, it is something that the West cannot compete with. Unless you are a Silicon Valley company.
Image | Google Maps, BYD
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