BEIJING – If global automakers think they can extend their dominance in China into the electric age, they may be shocked.
The kings of the burning era such as Synthetic engine and Volkswagen are lagging behind local players in boom tram (EV) market in China, a key country to finance and develop their electric and autonomous ambitions.
For Beijing office worker Tianna Cheng, the main dilemma when she bought an electric Xpeng worth 180,000 yuan ($27,000) intersection is whether she should take the BYD or the Nio; she didn’t seriously consider overseas sales.
“If I had bought a petrol car, I might have considered foreign brands,” the 29-year-old said as she drove home from work. “But I want an electric car and out TeslaI see few foreign brands applying advanced smart technology properly. “
Driven by demand from consumers like Cheng, tram Sales are skyrocketing in China’s $500 billion auto market, the world’s largest.
In the first four months of 2022, the number of new energy passenger vehicles – pure EVs and plug-in hybrids – more than doubled year-on-year, according to data from the China Association of Automobile Manufacturers. up 1.49 million vehicles.
Cleaner technologies account for 23% of China’s passenger car market, where overall vehicle sales fell 12%, reflecting a sharp drop in demand for petrol cars.
According to data from the China Tourist Vehicle Association, no foreign brands have made it to the top 10 list of car manufacturers in the new energy vehicle (NEV) segment this year, except for electric car maker Tesla. American pioneer in third place.
All the rest are Chinese brands, from BYD and Wuling to Chery and Xpeng. Chinese leader BYD has sold about 390,000 EVs in the country this year, more than three times as many as global leader Tesla has sold there. The top-ranked traditional carmaker is Volkswagen’s joint venture with FAW Group, in 15th place in terms of electric vehicle sales.
Cheng said that overseas purchases, even though Buick Velite 7 or Volkswagen ID. , didn’t deliver what she was looking for: an EV capable of giving her the “comfort” of having a smartphone-like experience in her car.
“Foreign brands are far from my life and lifestyle,” said Cheng, whose digital assistant handles connections to apps like Alipay and Taobao and “does everything for me from open the window to turn on the music”, while her car’s software provides too many-air updates.
It is a reversal. Global brands have dominated in China since the 1990s, typically capturing 60-70% of passenger car sales in recent years. In the first four months of 2022, they accounted for 52%, with their April monthly market share being 43%.
Signaling the scale of the challenge facing traditional automakers, Nissan CEO Makoto Uchida told Reuters that some brands “may disappear after 3-5 years” in China.
“Local brands are becoming stronger,” said Uchida, who was previously Nissan’s head of China, adding that the quality of electric vehicles from Chinese manufacturers has improved rapidly, with Progress has been made over a period of several months.
“There is going to be a lot of change in China and we need to monitor the situation carefully,” said the executive, adding that automakers must be agile in design, development, and innovation. develop and launch new models.
“In those respects, if we slow down, we’ll fall behind.”
‘High-tech natives’
Bill Russo, a former Chrysler The CEO, who now heads Shanghai-based consulting firm Automobility, says global brands need to turn the tide quickly because they control less than 20% of the single-growth auto market. of China.
“Chinese brands are starting to race towards electric vehicles,” said Mr. Russo, adding that the consumer shift to cars that are essentially smartphones on four wheels seems to be is irreversible and traditional automakers are having a hard time keeping up.
“I think it’s a secular shift to high-tech,” he said of consumer demand for “user-centered digital service experiences”, focusing on interfaces, connections and applications.
“Traditional companies are not native high-tech.”
The Volkswagen Group brands, including Volkswagen, Audi, Bentley, LamborghiniPorsche and Skodahas led the market for the past two decades, along with General Motors brands such as Buick, Chevrolet and Cadillac.
The two global conglomerates had overall auto market shares of nearly 13% and 12% respectively in China last year, according to LMC Automotive. Detroit Giants GM also has a 44% stake in the SAIC-GM-Wuling Auto (SGMW) joint venture which is locally controlled and includes its sales by group number, although SGMW does not manufacture the American brands, only produces Wuling and Baojun cars.
GM is now focused on winning younger buyers in big cities that have so far largely ignored its models, according to two people familiar with the automaker’s business. auto in China.
The group has announced plans to spend more than $35 billion globally by 2025, including more than 30 new electric vehicles, more than 20 of them in China, starting this year with the launch of electric vehicles. completely. Cadillac Lyriq crossover SUV.
Two sources say the launch of the Lyriq will be followed by an electric Buick SUV and a smaller, sportier electric crossover, both also scheduled for earlier this year.
Buicks sales have fallen 32 percent over the past five years to 828,600 vehicles in 2021, while Chevrolet more than halved to 269,000 vehicles, according to LMC Automotive.
GM told Reuters it is aiming to install 1 million EV per year production capacity by 2025 in China, adding that demand for the Buick Velite NEV family and Chevrolet Menlo EV “both increase significantly” in 2021 and three first month of this year.
It says it is rolling out smart technologies including hands-free driver assistance on the highway, “aviation-grade” cybersecurity and over-the-air software updates.
Autobahn speed?
Volkswagen, which is spending about $55 billion globally on electric vehicles by 2026, has rolled out its new generation of IDs. in China early last year but missed its target of selling 80,000 to 100,000 vehicles last year. It aims to sell 160,000 to 200,000 IDs. This year, although only 33,300 units have been sold through the end of April.
According to one of GM’s people and a Volkswagen insider, the main concern for foreign brands is that their new electric vehicles are being designed more for the US and European markets. , focusing more on performance and durability.
“Autobahn speed? In most major cities in China, traffic is so congested that people can’t even drive above 60 km/h on most days,” a source close to GM said. said people familiar with the company’s product plans and product development processes. .
Volkswagen says NEV demand in China is closely related to “smart car“topic, adding that they are investing in local R&D, particularly in software.
“Our strategy will enable us to achieve our ambitious targets in China. By 2030, we also want to be the market leader in e-vehicle vehicles and thus ensure that Volkswagen remains be number one in China in the future,” it added.
The challenge for global brands is finding a formula to capture consumers in big cities with disposable income, like Cheng in Beijing and Li Huayuan, a civil engineer from Shanghai.
Li only despised Japanese and German brands when he bought his BYD electric sedan last year for 290,000 yuan including insurance.
“It seems to me that only Tesla stands out when it comes to American brands,” he said from a parked BYD car in Mianyang city, Sichuan province, where he was working on a project. “Other brands don’t even seem to compete with me.”
(1 dollar = 6.6499 Chinese Yuan)
(Reporting by Norihiko Shirouzu; Additional reporting by Zoey Zhang in Shanghai, Kevin Krolicki in Singapore and David Dolan in Tokyo; Editing by Pravin Char)
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