ANY DOUBTS that China has become
the heartland of the global car industry
are quickly dispelled by a visit to the coun
try’s main motor show. Beijing’s crowd
ed event this year was twice as large as in
2024 (it moves to Shanghai on alternate
years) with around 180 new cars on display.
The show, which concluded on May 3rd,
demonstrated once again that foreign car
makers are lagging behind their Chinese
rivals in the race to the industry’s future.
Yet the show also illustrated the extent
to which foreign carmakers are looking to
remake themselves in the image of their
ascendant Chinese competitors. At events
to launch new models Western executives
from Volkswagen (VW) and Mercedes
switched effortlessly between English and
Mandarin. VW opted to round off its show
with a display of interpretive Chinese
dance set to electronic music; Mercedes
went for a Chinese rap.
To stem their loss of market share, car
makers around the world are looking to
become more like their Chinese competi
tors—and not just when operating in
China. So they might. Fran?ois Provost,
Renault’s chief executive, admits that
China now leads the industry in technolo
gy, speed and competitiveness. To match
them, increasingly rattled car bosses are
adopting Chinese practices and partner
ing with Chinese firms. Done judiciously,
this may help them close the gap. But fur-
ther down the road potholes lurk.
Slowing the pace of China’s blistering
rise is vital. The market share of foreign
firms in China has almost halved in five
years, to around 30% in 2025. Moreover, in
2023 China passed Japan to become the
world’s largest exporter of cars (see chart
on next page). In 2025 over 8m of its vehi
cles went abroad, nearly a third more than
the year before. In Europe over the past
five years, Chinese brands have gone from
almost nowhere to nearly 9% of all sales,
estimates Schmidt Automotive Research, a
consultancy. Incumbents are also under
siege in markets from Mexico and Brazil to
Indonesia and Malaysia.
Chinese cars are cheap. They are also
packed with whizzy technology. Often in
partnership with local tech giants, the
country’s carmakers have developed soft
ware that has become an increasingly
important differentiator; among the latest
examples is the integration of voice-con
trolled artificial-intelligence systems.
The pace of innovation is stunning.
“China speed” has become the “drumbeat”
of the industry, says Ola Kallenius, boss of
Mercedes. The legacy industry’s product
development cycle—roughly 40 to 80
months for new models—now looks pain
fully slow. Production processes designed
around electric vehicles (EVs), combined
with deep vertical integration and a greater
willingness to improve vehicles after they
are released via software updates, mean it
takes 24 months at most in China. The
technology integrated into foreign cars is
often two years or more behind rival
Chinese offerings.
Incumbent carmakers have begun to
overhaul their businesses in response.
Designing cars in Europe for the world has
“had its day”, says Oliver Blume, boss of
VW. The carmaker has started engineering
vehicles at a vast new research-and-dev
elopment (R&D) facility in Hefei, at a
pace 30% faster than in Europe. These will
be sold not only in China, but also some
overseas markets. Mr Kallenius of Mer
cedes, which has also expanded its R&D
presence in China, argues that the speed of
innovation there will have to spread
around the world. Even Renault, which
does not sell cars in China, is now using
the country to hasten its innovation: its
latest Twingo model, though designed in
France and manufactured in Europe, was
developed in China to save time and
money and glean know-how.
To help them catch up in EVs, foreign
carmakers have also sought the assistance
of Chinese firms. VW, which is launching
20 new models in China this year alone,
has allied with XPeng, a local carmaker,
and Horizon Robotics, an autonomous
driving startup. Toyota, which will make
electric versions of its upmarket Lexus
brand at a new factory near Shanghai start
ing in 2027, is working with Huawei and
Tencent, two Chinese tech giants that dev
elop software for cars, as well as Momenta,
a rival to Horizon Robotics, and Xiaomi, a
gadget-maker with a growing EV business
of its own. BMW and Nissan have likewise
teamed up with local companies.
Rumours of more tie-ups abound. Mer
cedes reportedly plans to use vehicle archi
tecture from Geely, one of China’s biggest
carmakers, to develop small EVs in the
country independently of its European
operations. Even American carmakers are
starting to buddy up with the Chinese.
Ford is said to be talking to Geely about
sharing technology and making vehicles in
Ford’s European factories.
Will efforts to become more Chinese
work? Pedro Pacheco of Gartner, another
consultancy, warns that China speed is
“not a magic formula but a mindset” that
will be very hard to match. It is the result of
a culture of long hours and an industry that
has been built from the start around soft
ware-infused EVs. Restructuring legacy
carmakers that have relied for decades on
petrol power and mechanical engineering
will be tough. Mr Blume adds that VW will
never be as fast as a Chinese startup be
cause it will never compromise on safety
and testing. Get this wrong and the dam
age to its reputation could be serious.
There is nothing wrong with embracing
Chinese technology, supply chains and
production methods and exporting them
globally, reckons Patrick Hummel of UBS,
a bank, as long as foreign carmakers are
not “pushed to the passenger seat”. But as
Tu Le of China Auto Insights, another
consultancy, puts it: by relying on technol
ogy from Huawei and other Chinese firms
for its new cars, what does Toyota now
offer? Chevrolet’s attempts to rekindle
sales in South America by putting its
badge on EVs from its joint venture with
SAIC, another Chinese carmaker that has a
presence of its own on the continent, risks
promoting a rival at the expense of the
American marque, says Felipe Munoz, an
industry analyst.
That points to the long-term risks that
come with seeking the help of Chinese
companies that are increasingly compet
ing with the legacy carmakers abroad.
Xpeng is expanding rapidly in Europe and
Xiaomi has plans to arrive next year, for
example. There is a danger that foreign
incumbents are not provided with the
latest and best technology by potential
rivals whose activities they are now fund
ing through licensing fees.
Moreover, relying too heavily on part
nerships risks creating a dependency that
cannot be broken. Philippe Houchois of
Jefferies, another bank, thinks that foreign
carmakers may intend to move away from
Chinese partnerships in the future. But
that could prove difficult unless legacy car
companies can transform into successful
software-makers, a task at which they have
so far failed. Mr Blume maintains that
VW’s goal is to become a “leading tech
player worldwide”. But its Cariad software
division has struggled.
Therein lies the challenge. To avoid fall
ing irrecoverably behind Chinese compet
itors in EVs, incumbent carmakers may
have little choice but to strike partner
ships. But in doing so, they run the risk of
ceding expertise in the areas that will
define the future of the auto industry. That
would leave them at the mercy of the rivals
they fear the most. ■
【 在 diruoy 的大作中提到: 】
: 为什么本版还那么多带辫子的遗老遗少吹捧丰田
: 或者大众bba等合资油车
: 不明白
: ...................
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