Global carmakers are facing an electric shock in China

BEIJING – If global automakers think they can extend their dominance in China into the electric age, they could take a hit.

The kings of the Cold War, such as General Motors and Volkswagen, are lagging behind local players in China’s growing electric vehicle (EV) market, a country that is key to financing and developing their electric and autonomous ambitions.

For Tiana Cheng, an employee at the Beijing office, her main dilemma when buying the 180,000-yuan ($ 27,000) Xpeng electric crossover was whether she should buy a BYD car instead, or a Nio; He did not take foreign Marx seriously.

“If I had bought a petrol car, I would have considered foreign brands,” the 29-year-old said as he returned home from work. “But I wanted an EV, and without Tesla, I’ve seen a few foreign brands apply advanced smart technology properly.”

Due to consumer demand like Cheng’s, electric car sales are rocking China’s roughly $ 500 billion auto market, the world’s largest.

According to the China Association of Automobile Manufacturers, in the first four months of 2022, the number of new energy passenger vehicles – pure EVs and plug-in hybrids – more than doubled to 1.49 million vehicles a year earlier.

Cleaner Technologies accounted for 23% of China’s passenger car market, where overall vehicle sales fell 12%, reflecting a sharp decline in demand for petrol cars.

According to the China Passenger Car Association, there is no foreign brand among the top 10 automakers in the New Power Vehicle (NEV) segment this year, with the notable exception of US electric pioneer Tesla in third place.

All other Chinese brands, from BYD and Wuling to Chery and Xpeng. Chinese leader BYD has sold about 390,000 EVs in the country this year, three times more than world leader Tesla. Volkswagen’s initiative, with the top traditional carmaker Hall FAW Group, ranks 15th for EV sales.

Cheng says whether the foreign is the ID of Marx, Buick Valentine 7 or Volkswagen. The series, however, failed to deliver what he was looking for: an EV capable of giving him the “comfort” of a smartphone-like experience in his car.

“Foreign brands are far from my life and way of life,” says Cheng, whose digital assistant manages connections to apps like Alipay and Taobao, and “does everything for me, from opening windows to turning on music,” while his car provides additional software. By The-Air Update.

It’s quite the opposite. Global brands have dominated China since the 1990s, typically winning 60-70% of the overall passenger car sales in recent years. In the first four months of 2022 they occupied 52%, their April monthly share was 43%.

Indicating the level of challenge facing traditional automakers, Nissan CEO Makoto Uchida said Reuters Some of those brands in China “could disappear in three to five years”.

“Local brands are getting stronger,” said Uchida, who previously headed Nissan’s China, adding that the quality of EVs from Chinese manufacturers has improved rapidly, with progress being made in just a few months.

“There will be a lot of transformation in China and we need to monitor the situation carefully,” the CEO said.

“In these areas, if we were slow, we would be behind.”

‘Hi-Tech Natives’

Bill Rousseau, a former Chrysler executive who now heads Shanghai-based consultancy Automobiles, says global brands need to take a quick turn because they control less than 20% of China’s only growing auto market.

“Chinese brands are winning the competition in the EV,” Rousseau said, adding that shifting consumers to cars that seemed largely irreversible to four-wheeled smartphones was a problem for traditional carmakers to maintain.

“I think it’s a secular shift toward high-tech,” he said, referring to consumer demand for a “user-centric digital service experience” with a focus on interfaces, connectivity and apps.

“Traditional companies are not high-tech natives.”

Brands of the Volkswagen Group, including Volkswagen, Audi, Bentley, Lamborghini, Porsche and Skoda, have led the market for most of the past two decades, such as General Motors Marks, such as the Buick, Chevrolet and Cadillac.

According to LMC Automotive, the total auto market share of the two global groups in China last year was about 13% and 12%, respectively. Detroit giant GM also has a 44% stake in the locally controlled SAIC-GM-Wuling Auto (SGMW) initiative, and includes its sales in group numbers, although SGMW does not make American brands, only Wuling and Baojun cars.

GM is now focusing on winning young buyers in big cities who have so far dropped out of its models, according to two people familiar with the automaker’s business in China.

The group has announced electrification plans to spend more than 35 billion worldwide by 2025, including more than 30 new EVs, including more than 20 in China, starting this year with the launch of the All-Electric Cadillac Lyric Crossover SUV.

Two sources said the Lyriq launch would be followed by an electric Buick SUV and a smaller, sportier electric crossover, both planned for earlier this year.

According to LMC Automotive, Buicks sales in the last five years fell 32% to 828,600 vehicles in 2021, while Chevrolet shrunk by more than half to 269,000 vehicles, according to LMC Automotive.

GM informed Reuters It aims to set the capacity for China to produce 1 million EVs a year by 2025, adding that the Buick Velite NEV family and the Chevrolet Menlo EV “both have grown significantly” by 2021 and the first three months of this year.

It says it is installing smart technology on the highway, including hands-free driver support, “aviation-grade” cyber security and over-the-air software updates.

Auto speed?

Volkswagen, which is spending about $ 55 billion on global EVs by 2026, has launched its new generation ID. The series in China at the beginning of last year but missed the target of selling 80,000 to 100,000 cars last year. It aims to sell 160,000 to 200,000 IDs. Cars this year, though it has sold only 33,300 as of April.

According to a source close to GM Plus, a Volkswagen insider, a major concern for foreign brands is that their new EVs are being designed more and more for the American and European markets, with a greater focus on performance and durability.

“Automatic speed? Traffic congestion is so high in most major cities in China that people can’t even drive above 60km / h on most days,” said a source close to GM, who is familiar with the automaker’s product planning and product development process. .

Volkswagen says NEV demand in China was strongly linked to the “smart car” theme, adding that it is investing in local R&D, especially software.

“Our strategy will enable us to achieve our ambitious goals in China. By 2030, we want to be at the forefront of the e-vehicle market and thus ensure that Volkswagen will be number one in China in the future.”

The challenge for global brands is finding ways to win the hearts of consumers in big cities with disposable incomes, such as Beijing’s Cheng and Shanghai’s civil engineer Li Huayuan.

When buying his BYD electric sedan for 290,000 yuan, including insurance, last year, Lee only considered Japanese and German brands half-heartedly.

“I think Teslai is the only American brand different,” he said from his parked BYD car in Mianyang, Sichuan province, where he was working on a project. “Other brands don’t even seem competitive to me.”

($ 1 = 6.6499 Chinese Yuan Renminbi)

(Reporting by Norihiko Shirozu; Joey Zhang in Shanghai, Kevin Kroliki in Singapore, and David Dolan in Tokyo; Additional Editing by Pravin Char)

Related videos:

Leave a Reply

Your email address will not be published.