This chapter explores the transformation of China’s automotive industry amidst the challenges of the Covid-19 pandemic and increasing geopolitical tensions, particularly with the United States. The research investigates the shift from traditional car manufacturing, characterized by joint ventures between state-owned enterprises and foreign corporations, to a more fragmented and specialized production model. The major research questions are how the geopolitical and pandemic-driven disruptions have accelerated the vertical disintegration of the automotive value chain in China and how they transformed the production networks, particularly in the battery sector. The findings suggest that China’s New Energy Vehicle sector has not only become a global leader but also exhibits a new form of production organization. Specialized producers of key components, especially batteries, dominate important parts of the value chain and challenge the role of established car manufacturers, leading to the formation of new alliances and competitive dynamics. However, this shift also poses significant economic and social challenges, including overcapacity, monopolistic tendencies, and vulnerability to protectionist policies and geopolitical conflicts.