Industry growth driven by technological development China is gradually enhancing its international competitive advantage in EVs, largely due to a mature industrial supply chain, market scale and competition.Key technological approaches, such as improving battery energy density, are expected to lead to breakthroughs in China. The energy density of the lithium ternary battery has exceeded 300 watt-hours per kilogram (Wh/kg), subsequently increasing the cruising range.45 Solid-state batteries are also anticipated to provide more efficient energy for EVs, with leading companies advancing progress on all-solid-state batteries,46 and some mass-producing semi-solid-state batteries. China’s battery energy density development47FIGURE 5 2020300 2025400 2030500China battery energy density roadmap Wh/kg Source: Ministry of Industry and Information Technology of the People’s Republic of China. Improvements in battery efficiency and optimizations in cost management are further reducing EV prices. In 2023 alone, the price of power lithium battery cells in China dropped by more than 40%.48 Alongside cost reductions, China’s EV industry continues to advance technologically, particularly in autonomous driving, connectivity via mobile internet, electrification and shared mobility trends (ACES trends).49 While these emerging technologies can reduce price and drive market expansion, they may also increase the consumption of key materials and cause nature loss if not managed well. It is crucial for the sector to address environmental impacts and contribute sustainability to evolving technologies from the outset. Chinese players going global The demand for EVs is rapidly growing overseas, prompting Chinese automakers to accelerate their investments in key international markets. Since 2017, companies such as Build Your Dreams (BYD), Geely, NIO, SAIC Motor and Great Wall Motors have been investing in overseas manufacturing plants. Leading supply chain companies are also expanding their reach globally, such as Great Wall Motors in Thailand,50 NIO in Hungary,51 Contemporary Amperex Technology Co., Limited (CATL) in Germany52 and BYD in Brazil.53 Chinese companies going global also face challenges, such as managing environmental impacts under overseas regulations. Regional legislation – such as the Inflation Reduction Act (IRA), the European Critical Raw Materials Act, the EU Battery Regulation and the Carbon Border Adjustment Mechanism (CBAM) – supports green industries locally but also imposes restrictions on foreign players and imported materials or goods, including automobiles or parts manufactured in China. This may encourage more Chinese automakers to establish operations in the region rather than relying on exports. In 2023 alone, the price of power lithium battery cells in China dropped by more than 40%. Nature Positive: Role of the Automotive Sector – China Deep-dive 17

Nature Positive Role of the Automotive Sector China Deep dive