**Introduction** Automakers are continuing to expand investment in China despite declining market share because the country remains the core of global electric vehicle (EV) demand, the most cost-competitive and comprehensive EV and battery supply chain, and one of the fastest environments for product development and manufacturing upgrading — capabilities that directly strengthen competitiveness in international markets.These benefits can outweigh the disadvantage of losing share to domestic EV leaders. **Drivers of continued investment** **1.** **China’s EV market scale underpins global production volume and technological upgrading** China is projected to account for more than 14 million electric car sales in 2025, with EVs representing roughly 60% of total new vehicle sales, consolidating its position as the world’s largest electric vehicle market[1]. This scale provides a critical base for high production volumes, rapid model iteration, and brand positioning in electric mobility. Even as foreign manufacturers lose market share, maintaining operations at scale in China supports cost reduction, process optimization, and accelerated technological upgrading that can enhance competitiveness in other markets. **2.** **China’s EV value chain remains the most integrated and cost-competitive globally** China continues to serve as the primary global production base for electric vehicles, accounting for more than 70% of worldwide electric car output in 2024[2]. In battery manufacturing, it represented over 80% of global EV battery production capacity in 2023, underscoring the high degree of industrial concentration in upstream and midstream segments[3]. This dense industrial ecosystem supports competitive input pricing, deep supplier networks, and rapid scaling of new technologies. For automakers, local investment provides direct access to battery supply, advanced components, specialized manufacturing capabilities, and process innovation within a tightly integrated production environment. **3.** **China operates as a development base and export platform despite declining foreign market share** Intensified competition from domestic EV manufacturers has compressed margins, but it has also accelerated upgrading in software-defined vehicles, battery integration, and manufacturing productivity. Operating in this environment compels continuous product refinement and shorter innovation cycles. At the same time, China’s industrial ecosystem has supported the development of large-scale automotive production and export capacity, strengthening its role in global supply strategies[4]. Multinational automakers continue to internationalize production amid heightened competition from Chinese EV producers, suggesting that firms are recalibrating operational footprints rather than withdrawing from the market[5]. **Conclusion** Declining market share in China reflects intensifying domestic EV competition rather than diminished strategic relevance. China’s scale of demand, concentration of battery and component production, integrated manufacturing ecosystem, and rapid product-development cycles underpin capabilities that remain central to global EV competitiveness. For many foreign automakers, maintaining and expanding investment in China is therefore a strategic decision tied to cost efficiency, technological upgrading, and export positioning — even when short-term commercial performance in the domestic market is under pressure.
