Why Chinese manufacturers dominate the solar panel and battery industries

In my view, the reasons Chinese manufacturers dominate the global solar panel and battery sectors, relative to Western producers, are as follows:

A serious, long-term state industrial strategy, aimed at developing these clean-energy sectors, creating a competitive environment and a domestic market, and controlling the main mineral supply chains worldwide;

2) State investment and subsidies for developing clean-energy sectors, including solar power, electric vehicles and batteries;

3) Full self-sufficiency in rare-earth mineral resources, including silicon, lithium and others. American and European producers have no such advantage and must gather mineral resources from around the world. Western countries lost time and missed opportunities, while China has steadily invested large financial resources in developing resource deposits and building processing capacity around the world;

4) Economies of scale from a huge domestic market in China, which allows production in large volumes at competitive, low prices;

5) Technological innovation, including robotisation and production automation, which raises productivity and cuts costs: For example, BYD’s battery plants employ just 50 workers per gigawatt-hour (GWh) of output, compared with 233 workers at other plants in China. Plants in the US employ 300 workers, six times as many as BYD’s.

BYD’s plants also have high product “yields”, meaning that almost every component produced meets the quality standards needed for use in final products. This comes from production automation, which makes it possible to optimise processes with minimal errors and to cut scrap and production costs substantially compared with other manufacturers;

6) The rapid expansion of China’s energy infrastructure, which generates large amounts of electricity and allows more efficient use of solar panels, electric vehicles and batteries;

7) Cheap electricity in China compared with Europe. For example, many Chinese solar panel and battery plants are located in Xinjiang, which enjoys many advantages, including cheap electricity.

According to open sources, electricity in this Chinese region costs 2 euro cents per kWh (about 300 sum in our money). In Europe the average energy price is around 20 euro cents, ten times more than in China. Cheap electricity is one of the fundamental factors in a country’s economic development.

8) The country’s strong scientific and technical potential, a serious education system and large state investment in science and education.