Green technologies have become a field of competition between countries that are looking for new areas of economic growth and building low-carbon economies. This paper focuses on the case of electric vehicles (EVs) to look at the various actors embedded in the innovation network and explore the progress of and challenges to the diffusion of EVs in China. It complements a systems of innovation approach with the theory of institutional legitimacy, and discusses the regulative, normative, and cultural-cognitive types of legitimacy for different EV-related actors in China. We argue that the EV industry has gained a certain level of regulative legitimacy from the Chinese central state and some local states, but because of power struggles among stakeholders, it has not achieved much normative or cultural-cognitive legitimacy. In fact, it seems that what consumers want is different from what the central and local states have promoted. The discrepancy in different types of legitimacy is also because state investment in green technologies is more of an industrial policy than an environmental policy, seeking to leapfrog China into a technological powerhouse. We thus propose that when studying systems of innovation, it is important to take into account power dynamics across actors and the interactive process of establishing legitimacy, because institutions should not be taken as static, pre-given structures. The different layers of institutions are not always congruent, and when faced with conflicting institutional demands, actors may develop strategies to adapt and change the institutions.