BEIJING -- Green licence plates were rare sights on China's roads a decade ago. Now, one out of every three cars sold in China is powered by new energy.

This huge change represents a collective triumph for indigenous manufacturers, as China has produced the most new energy vehicles (NEV) globally for the past eight consecutive years.

For individual players, however, this glory didn't come easily as they each fought a hard war to survive and thrive, and are still fighting for greater market prestige and a bigger market share.

"China has become the largest NEV market globally, but it is also the most competitive and open market in the world," said Li Bin, founder of electric carmaker NIO at this year's International Motor Show in Germany.

According to information service provider MarkLines, China's NEV maker BYD ranked among the global top 10 auto companies in the first six months of this year, the first Chinese carmaker ever to achieve this feat.

In China's domestic market, most of the top 10 spots in the January-August retail sales rankings were filled by domestic automakers, data from the China Passenger Car Association (CPCA) showed.

Such market dominance underscored the growing influence of Chinese brands both at home and beyond China, and confirmed the edge Chinese NEV brands have over their foreign rivals.

"Starting a business in China can be both happy and painful," Li said. "The upside is that China boasts the largest market and a stable policy environment, but market competition in the country can be intensely fierce."

A FALTERING START

NEV giant BYD was an early starter in the pursuit of NEV manufacturing in China. When the battery producer decided to make inroads into the auto industry, its NEV dream was met with suspicion and doubt. On its first day in this industry, the company's stock prices plummeted 20 percent.

In 2004, when BYD's new energy cars made their debut at Beijing's international auto show, the company was the only carmaker there to exhibit NEVs.

"At the time, nobody believed that NEVs could have a future," said Wang Chuanfu, chairman of BYD. "Everyone questioned whether BYD had the capacity to produce electric cars."

Dismissing doubts, BYD has remained committed to the NEV path over the years, setting aside considerable budgets for research and development annually, even in times of financial strain.

At the very beginning, however, consumers only had a limited number of NEV models to choose from and were quite lukewarm in their response to such vehicles. NEVs did not have promising business prospects back then, as the industry was seriously constrained by factors such as range anxiety and the limited availability of charging facilities.

The market was clouded by uncertainty, until a forceful shot in the arm via government incentives injected greater positivity.

To delineate roadmaps for NEV development, China unveiled overarching guidelines for the sector, taking into consideration research of key technologies including power batteries and driving motors, and the building of charging infrastructure, among others.

Over the years, the country's central authorities have introduced over 70 policy measures to spur growth in the NEV sector, and local governments have also unveiled various supporting policies suited to local conditions, said Xin Guobin, vice minister of industry and information technology.

Deng Zhou, a researcher with the Chinese Academy of Social Sciences, said that an important feature of China's NEV policies is its focus on consumption stimulus.

Deng cited the metropolis of Shanghai in east China as an example. Qualified NEV owners there can get car plates for free, while fossil-fueled car owners need to bid for car plates, encouraging consumers to choose NEVs instead of petrol vehicles. According to data from the Shanghai municipal government, the average transaction price of license plates stood at 92,753 yuan (about $12,933) in August this year.

To curb air pollution, Beijing has put a cap on the number of new car plates and imposed driving restrictions on fuel cars on weekdays based on license plate numbers. The city's license plate lottery system for fuel cars has convinced many drivers to choose electric vehicles, which are free from traffic control on weekdays.

Policy measures such as lower taxes, purchasing incentives and technological innovation support, have helped foster a rapidly growing NEV market.

After twenty years in NEV manufacturing, BYD has certainly been a witness to the rapid evolvement of the country's NEV market, while also playing an active role in it.

Expanded markets and upgraded technology have resulted in people's consumption structure becoming more diverse, pushing automakers to keep rolling out new products, said the Shenzhen-based carmaker.

A SURVIVAL RACE

In addition to policy incentives, stronger environmental consciousness has also improved the acceptance of low-carbon cars among Chinese consumers, helping to shore up market demand, analysts said.

Wu Kai, chief scientist of Chinese battery maker Contemporary Amperex Technology Co., Ltd., highlighted the role of market expansion in technology development.

Power batteries have been crucial to the rise of China-made NEVs. The country has the largest number of power battery proprietary technologies in the world, with advantages gained in market share and supply chains.

The fast-growing market has prompted battery producers to delve deeper into materials and structures, pushing China's power battery industry to the forefront globally, Wu said.

While growing with robust vitality, Chinese automakers are set to face more intense competition down the road, as incentives gradually phase out and price wars further intensify.

China had 487 NEV manufacturers in 2018, but the number has dwindled to just over 40 in 2023, according to a rough estimate.

Over two thirds of the automakers will be knocked out of the market in the next three to five years, and no more than five major players will still be in the game, said Zhu Huarong, chairman of Changan Automobile Co., Ltd.

According to Great Wall Securities, automakers that have not yet achieved large-scale production and lack brand recognition are more likely to be squeezed out of the market.

In today's market, a step taken too slow could impact very negatively on the steps that follow, said Wang Chuanfu. "So when an opportunity presents itself, we must race to grab it."

The NEV behemoth has made strategic moves in different market segments, with new brands Tengshi and Yangwang launched for the luxury NEV market.

In times of transformation, companies need to equip themselves with innovative technologies, precise strategies and flexible decision-making, Wang said. "To survive the ongoing competition, all three factors are indispensable."

Looking to the future, China's NEV industry needs to work on its weak links, said the CPCA, urging Chinese carmakers to achieve breakthroughs in key technologies such as next-generation power batteries and intelligent operating systems, and reduce supply chain risks to ensure industrial security.