An electric economy, a decade early
Nobody would call Chengdu a quiet city. When you have twenty-one million people, scooter horns, hotpot exhaust fans, and construction at all hours, you get a pretty loud place. Then I stood at a light on the Second Ring Road, and it took me a second to work out what was missing... engine noise.
Chengdu has more registered vehicles than any other city in China (it passed Beijing back in 2023), and a striking share of them wear the green plates reserved for new-energy vehicles (a category that covers battery EVs and plug-in hybrids). My DiDi driver picked me up in a BYD EV. The buses run on batteries, and the scooters never burned gas in the first place.
None of it made the place any calmer, though. It was as loud as advertised... just without much combustion behind it.
In the States, EV adoption gets treated as a policy question vis-a-vis mandates and tax credits, or environmental “pride”. It’s a whole different world in Sichuan.
New-energy vehicles were over 50% of China's new vehicle sales in 2025. In the U.S., EVs were about 7.8% for the full year, and 5.7% in the fourth quarter after the federal tax credit expired. BYD, which used to make only lithium batteries, passed Tesla in 2025 as the world's largest seller of battery-electric vehicles, and its entry-level Seagull sells for well under $10,000. The average new EV sold in America goes for about $58,000, and the cheapest one on the lot, the Nissan Leaf, starts near $30,000. (Different cars for different buyers, sure... but the gap is still the gap.)
A Chinese suburban neighborhood near Chengdu. Green plates mean battery EVs or plug-in hybrids.
Chinese buyers switched on price. Residential electricity runs about 0.53 RMB per kilowatt-hour (roughly 8 U.S. cents), well under half the U.S. residential average of about 18 cents... which is itself climbing. Charging at home overnight, 500 kilometers of range costs something on the order of 40 to 50 RMB (call it $6-$7). The same charge at U.S. home rates runs about double, and covering that distance on gasoline costs several times more.
Once the operating cost falls that far, the environmental argument almost becomes beside the point. It is simply the cheaper car to own, and Chinese consumers do what consumers do with a cheaper option.
Where the cheap electrons come from
Nationally, they come mostly from coal, which still supplies more than 50% of China's power generation. Hydro is second, near 13%; wind and solar a combined 22%, and nuclear around 4 to 5%.
Sichuan is the outlier. The "province of a thousand rivers" gets around 80% of its power from hydro, and in a normal year it exports the surplus east to Shanghai and Zhejiang. The input changes by region (coal in the north and water down here), but the operating principle holds everywhere: abundance.
China added over 543 gigawatts of new capacity in 2025. Wind-and-solar capacity surpassed coal capacity for the first time in early 2025, and the country keeps adding nuclear on top of that. Keeping power cheap is the policy... and the economy electrifies itself around the policy.
China's electricity generation capacity by type. Source: National Energy Administration
I am not going to pretend this is a model to admire on emissions. Coal is coal, after all. But the economic lesson is instructive: when power is cheap and there is a great deal of it, people invent new things to do with it.
AI turned out to be an electricity story too
AI was open on a phone screen everywhere I looked.
DeepSeek's R1 launch in January 2025 was called China's "Sputnik moment," and by late 2025 it was reported that more than 130 million active users were on the app. What I actually saw was ByteDance's Doubao (the everyday AI leader in China) open in the subway and at teahouse tables, with shopkeepers writing ads and students doing homework.
A few weeks ago, Beijing-based Moonshot AI released its Kimi K3 model for public download, the latest in a wave of Chinese "open-weight" models that anyone can download and modify for free. Labs like Moonshot are cornering the market for cheap, customizable intelligence, and they are threatening to turn America's pricey flagship models into a niche product.
The playbook matches the one running in cars and in power generation, which is to compete on cost and on volume and leave the prestige to somebody else. All of that computation resolves back to the same input... electricity.
America's turn, with a catch
The U.S. is entering its own electricity upcycle. After twenty flat years, demand has grown about 2% a year over the past five, setting records in 2025 and again in 2026, driven mostly by data centers. Goldman Sachs sees U.S. data center demand more than doubling, from about 31 GW in 2025 to 66 GW by 2027.
China’s power generation expanded fivefold while U.S. growth has been flat until recently. Source: Bloomberg
We cannot take China's coal shortcut, and our generation mix is close to the mirror image of theirs. Natural gas supplies over 40% of U.S. generation. Nuclear runs about 18%, with coal at 16%.
Nonetheless we cannot build renewables fast enough to close the gap either. Permitting fights and local opposition slow the front end, and then interconnection queues run for years on the back end. The strain is already showing up in people's bills, with average U.S. residential power prices up 42% over five years (and PJM setting record capacity prices three years running).
Chinese power policy is built to enable demand. American policy works as a constraint on it, and constraints are usually where the investment returns live, in our view.
How fast can American supply actually respond to this? I don’t think anyone has a confident answer... I certainly don’t.
Why we still hold Talen
If the U.S. follows even part of China's path on electricity demand, the scarce asset is clean dispatchable power, which means nuclear and natural gas. To us, that’s Talen Energy (TLN).
Its Susquehanna nuclear plant anchors a power deal with Amazon for up to 1,920 MW through 2042, for roughly $18 billion of contracted revenue. Talen recently closed two acquisitions of natural gas assets, adding about 5.5 GW of capacity.
Chengdu showed me what an electrified economy looks like when the power behind it is abundant. America looks likely to electrify despite power being scarce and getting pricier, which is a very different setup. We would rather own the scarce power generation than not.
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