Since 2021, not a day passes without electric vehicles making the news. Electric vehicles (EVs) have become frequently visible on city streets. Have electric vehicles crossed the so-called chasm (the tipping point for widespread adoption) and entered the early stages of mass adoption? While market growth is being reported, it is also true that the nascent electric vehicle market still contains many uncertainties that have yet to materialize, such as the sustainability of rare metal supply used in batteries, human rights issues at mining sites, and the soaring repair costs when aluminum unibody frames are damaged (often resulting in total vehicle loss).

■Have electric vehicles crossed the chasm (the tipping point for widespread adoption)?
Electric vehicles are covered daily in the news. However, in Japan, there still seems to be a prevailing atmosphere of viewing this as someone else's problem. So what is really happening globally? Understanding the data feels like the essential first step.

■Chinese manufacturers demonstrating strong presence in global EV rankings
To confirm the presence of the Chinese market in global EV sales, let us examine in detail the data of the top 3 companies in global EV sales rankings. We will also examine how dependent each manufacturer is on the Chinese market.

First, regarding Tesla, the top manufacturer. Tesla has sold over 3.63 million EVs globally since 2021, of which 45.7% were sales in the Chinese market. The fact that nearly half of Tesla's global sales already depend on the Chinese market represents an important premise for understanding this market.

Next, BYD and Wuling. Their global sales volumes are approximately 1.88 million and 1.14 million units respectively, of which 97.7% and 99.1% are sales in the Chinese market. This indicates that BYD and Wuling achieve virtually all their sales in the Chinese market. This means that Chinese automotive manufacturers' full commitment to EV transition is reflected in these numerical results. Why exactly is China putting such full effort into EV transition? While this has been discussed extensively elsewhere, let us organize our thoughts on this matter once again.

■Developing the automotive industry is the Chinese Communist Party's 100-year grand plan
Developing automobiles into a core domestic industry has been a long-cherished goal of the Chinese Communist Party and forms the core of the nation's 100-year grand plan. Within the reform and opening-up policies since the 1970s, China has made every effort toward this goal. Most symbolic of this are the joint ventures with foreign automotive manufacturers and automotive parts manufacturers.

The interests of global automotive manufacturers seeking to incorporate China's massive market into their own growth aligned with those of the Chinese government. Foreign companies accepted strict regulations from the Chinese government and established hundreds, even thousands of joint ventures. All were joint ventures with Chinese companies where foreign equity participation was limited to 50% or less.

Through these joint ventures, China made efforts to learn (or imitate) internal combustion engine automotive technology and make it their own. There is no doubt that these initiatives achieved results to a certain extent. However, this did not ultimately result in Chinese state-owned or domestic automotive manufacturers breaking into the global top 10. Why not? According to our analysis, this was because foreign partner manufacturers (referring to VW, GM, Toyota, and others) did not readily transfer the truly core advanced internal combustion engine technologies to China.

Foreign manufacturers made efforts to prevent technology leakage by bringing core components from overseas as much as possible. Additionally, building supply chain strategies to stably procure advanced engine parts by constructing intricately interwoven global parts supply networks proved extremely difficult for Chinese manufacturers. We can conclude that Chinese manufacturers ultimately never managed to break onto the global stage with internal combustion engine vehicles. While they could produce small quantities of high-quality vehicles, they could not mass-produce them globally. This is precisely why China is pursuing EV transition with full force, and why it can pursue this transition.

■For China, EVs represent not an "environmental issue" but a "pillar of national strategy"
It goes without saying that EVs have a fundamentally different structure from conventional vehicles. From the perspective of Chinese capital, which lacks successful experience with internal combustion engine vehicles and consequently has smaller legacy costs, EVs represent a very attractive market they can enter without being constrained by such factors. Moreover, battery technology, electrical control, and computing technologies used in EVs are areas where China can leverage competitive advantages cultivated since its era as the world's factory. Against this background, EVs for China represent a "market they absolutely cannot afford to lose" that goes beyond simply being a massive market opportunity.

The opening graph clearly demonstrates how uniquely structured China's electric vehicle market is. Despite Chinese EV manufacturers manufacturing and selling almost exclusively within China, Chinese manufacturers already account for more than half (12 companies) of the top 20 global sales rankings. China represents 30% of the global automotive market to begin with. By demonstrating presence in EVs there, manufacturers naturally position themselves highly in global rankings. This structure is clearly reflected in the data.

In fact, while VW and BMW globally demonstrate considerable presence in EVs, they lag behind in China. (Japanese OEMs have virtually no presence).
The electric vehicle market is extremely difficult to interpret correctly and predict due to various interests and positions at play. Our firm will continue to analyze data on this theme and provide objective perspectives going forward.