FROM the breathless headlines emerging from China鈥檚 electric vehicle (EV) industry in recent months, you鈥檇 think the laws of physics are different on the two sides of the Pacific.
In the US, Ordinary Joe is stuck in the slow lane in the Tesla Model S, with a measly 348 miles of driving range 鈥 or less on a cold day when you have the heating on. Meanwhile in China, Extraordinary Zhou can go 1,050 kilometers (656 miles) in her Nio, Inc. ET7, one of half-a-dozen local EVs with ranges above 700 km.
That鈥檚 not all. BYD Co. in March announced a breakthrough in charging, with new capabilities that could pump 400 km of range into a battery in five minutes, making recharging an EV as quick and efficient as refueling a gasoline car. Not to be outdone, Contemporary Amperex Technology Co., or CATL, last week unveiled an even more advanced system that could add 750 km in five minutes.
In the face of this onslaught, non-Chinese EV and battery companies are probably tempted to give up 鈥 or even follow President Donald Trump鈥檚 self-defeating path of melting down in a morass of tariffs, flickering policy reversals, and nostalgia for the heroic age of gasoline. Before they do, though, it鈥檚 worth reflecting on the hype cycle.
The hype cycle has been a perennial of discussions about Silicon Valley ever since the term was coined by Gartner, Inc. analyst Jackie Fenn in 1995, as the excitement over the dot-com bubble was starting to roar. It describes the way new innovations inevitably get talked up to ridiculous levels, before disillusionment sets in. Finally, they develop into mature technologies that are neither as transformative, nor as overrated, as previous stages in the cycle suggested.
China鈥檚 tech sector has often seemed more or less immune to this rollercoaster. US executives seem far more likely to extol the groundbreaking potential of Tencent Holdings Ltd.鈥檚 WeChat than Tencent itself. Solar panel producers have grown to the scale of the largest independent oil companies without stopping to boast about the fact. The world failed to notice the advances of China鈥檚 EV sector until its lead was unbeatable.
That seems to be changing, however.
Take those EV driving ranges. You might think Chinese cars can go further because of unique innovations, but the explanation is more humdrum. In most cases, it comes from offering oversized battery packs in long-range variants, even if most drivers stick to the more limited base models.
On top of that, the Chinese range-testing standard is more lenient than in Europe and the US, so a car that鈥檚 rated 300 km in the US would be judged at about 400 km in China. Finally, there is the anchoring effect of the conversion between the imperial and metric systems 鈥 400 km just sounds a lot further than 250 miles, even if it鈥檚 an identical distance. Put all those factors together, and China鈥檚 technological edge more or less disappears.
It鈥檚 a similar story with the charging breakthroughs promised by BYD and CATL. Neither company has detailed how many times their batteries can be fast-charged, for instance 鈥 a crucial consideration, since one of the main problems with the practice is the stress that it puts on the cell, drastically reducing its working life and even posing safety issues.
Nor have they given much clue about how dominant these systems are likely to get. The raw numbers suggest they鈥檒l be pretty rare. The full potential of BYD鈥檚 technology will require stations packing as much as 1,360 kilowatts of power, more than 10 times typical Chinese fast chargers at present.
BYD has promised to roll out 4,000 stations on that scale, representing an extraordinary 5.44 gigawatts, nearly sufficient to meet the peak-power needs of a city the size of London. The company may well deliver cars capable of occasionally charging at such extraordinary speeds, but even China鈥檚 grid would struggle to handle such technology becoming the standard way EV drivers refuel.
That still leaves the mystery of why corporate China is falling in love with hype.
For a Silicon Valley funded through public debt and equity, the hype cycle always served a useful purpose, providing a narrative to persuade investors to back loss-making early-stage technologies, in the hope they鈥檒l become an Alphabet, Inc. or an Amazon.com, Inc. rather than a WeWork, Inc. or a Groupon, Inc.
That鈥檚 less of a concern for BYD or CATL, long-established businesses so profitable that they can fund even industry-leading growth plans out of operating cash.
Another factor might be worth reflecting on, however. China鈥檚 love of the hype cycle is a relatively recent phenomenon, dating back to January鈥檚 global freakout, when DeepSeek blew apart some of the complacent assumptions of the US artificial intelligence industry.
That suggests the explanation is more about government finance than corporate finance. With Trump making tariffs and technological competition a key front in a new cold war against China, companies that were mostly treated with benign neglect by Beijing during their rise are joining the petroleum and aviation industries as major recipients of government funding.
Those sums are relatively small right now: BYD鈥檚 operating grants of 10.4 billion yuan ($1.4 billion) last year, the largest received by any car- or battery-maker, were equivalent to about 7.8% of its operating cashflow during the period. Still, they may grow increasingly important as trade tensions close off the export markets.
Silicon Valley companies developed the hype cycle as a way of capturing and maintaining their true masters, America鈥檚 stock and bond markets. If China鈥檚 clean tech companies are burnishing their images as national champions in the face of a more disruptive global environment, it suggests they鈥檙e doing the same 鈥 only this time, it鈥檚 the government they鈥檙e trying to satisfy.
BLOOMBERG OPINION
