First, Germany's Volkswagen announced a series of groundbreaking partnerships with a group of Chinese technology companies. Now, famous national brands from South Korea and Japan have decided that the only way to survive in the country's cutthroat car market is to buy Chinese-made technology.
Toyota last week chose the Beijing Motor Show, China's top industry event of the year, as the venue to announce a new partnership with Tencent, owner of super app WeChat. The world's largest automaker by revenue will work with China's most valuable listed company to develop services for domestic customers, including bringing Tencent's artificial intelligence and cloud-based software to its cars. become. Nissan announced a similar partnership with search giant Baidu to use Beijing Group's generated AI in its vehicles.
Hyundai, whose sales in China have plummeted in recent years, announced at the show that it would develop batteries with China's CATL. China's battery tycoon has snubbed its main supplier, South Korean compatriot SK On, by unveiling a new product touted to give electric cars a range of 600km on a 10-minute charge.
The three agreements mean the only way for China to catch up with Chinese automakers, which have prioritized electric vehicles and advanced technology, is to include the technology they use in their models, analysts and industry executives said. This highlights the fact that an increasing number of multinational companies are thinking that
“Four years ago, I thought it was almost certain that Chinese car companies would follow the rest of the world. [manufacturers]But now everything seems to have changed,” said Xie Tiandi, a spokesperson for DJI Auto, which was spun out of the world's largest drone maker and is now working with Volkswagen on driver assistance technology.
Sales by foreign automakers in China, the world's largest car market, fell to a record low of 40% market share in March, according to Automobility, a Shanghai-based consultancy. In recent weeks, sales of pure EVs and plug-in hybrids have exceeded half of new car sales in China for the first time.
VW, which has dominated China's car market for years, says it has not made enough moves toward electrification as Elon Musk's Tesla and Warren Buffett-backed BYD come to dominate EV sales. I had acknowledged it before.
The German group has been fighting back in its biggest market over the past 18 months, with a series of investments in Chinese technology, including a joint venture with Horizon Robotics, one of China's leading AI chip designers, and software group ThunderSoft. is making investments. The company will make an equity investment in Xpeng, a Guangzhou-based company that manufactures high-tech EVs.
Jürgen Reas, head of global automotive at US consulting firm Accenture, says multinational automakers are “reinventing” their business models to keep pace with domestic groups' rapid transition to smarter electric vehicles. He predicted that China will see “closer collaboration across the ecosystem” as it attempts to Features.
“The most important thing right now is acceleration,” he said, adding: “In China, it's seen as a technology sector, which is really the right way of thinking.”
Analysts say one area where the Chinese group is making rapid progress is in the technology behind autonomous driving, such as lidar and other types of sensors that detect surrounding road conditions.
Counterpoint Research predicts that by 2026 there will be 1 million cars in China equipped with so-called Level 3 technology (meaning the driver can take their hands off the steering wheel), and by 2028 these vehicles will be It is said that they will account for about 10% of new cars. .
According to the announcement, China produced 6.7 million cars in the first three months of this year, an 11% increase compared to the first quarter of 2023, and sales of EVs increased by 32%, with internal combustion engine (ICE) equipped Car sales increased by 3%. To the car.
Companies are increasing exports from China as the ICE market remains depressed due to significant overcapacity and sharp price pressures. According to automobile-related data, overseas shipments of Chinese-made cars in the first quarter increased 33% year-on-year to 1.3 million units, marking a record high. ICE vehicles accounted for 77% of exports, and BYD and Tesla together accounted for about 60% of EV exports.
Chris Thomason, who leads design at Nio, one of China's technology-focused EV startups, said that given China's history of manufacturing low-cost products, outside observers have found that the “level of quality” He said that he may have misunderstood. . . Or the technology behind the car.”
EV sales are lower than expected in many countries. Legacy car manufacturers in Europe and the US continue to prioritize sales of vehicles equipped with internal combustion engines, and the development of EV charging infrastructure has been delayed.
“Some markets don't have good products. That's why the market doesn't grow and expand,” said Brian Gu, president and vice chairman of Xpeng. “They’re not hiring. [EVs] As fast as China. To support that transition, you need to offer customers cost-competitive, innovative, and attractive products. ”
But concerns about national security and economic dependence on Communist Party-ruled countries have led the United States and its allies, including the European Union, to crack down on Chinese technology and secure supply chains without Chinese products.
Against this backdrop, experts said that foreign groups' deepening dependence on Chinese technology will raise questions in the domestic market.
Tu Le, founder of consultancy Sino Auto Insights, predicted that the global car market would become increasingly “bifurcated” and car manufacturers would need to replicate the development of smart driving features.
But for now, foreign automakers have no choice but to adopt Chinese technology to have a chance of survival in the domestic market.
“Foreign automakers are trying to stop the bleeding. The market share they are losing now may not be regained,” he said.
Additional reporting from Tokyo by David Keohane
