Global automakers face electric shock in China

Beijing — If you think the world’s automakers can expand their dominance China In the age of electricity, they may be shocked.

King of the burning era General Motors When Volkswagen Behind the booming local players Electric car (EV) Chinese market. It is a key country for funding and developing electrical and autonomous ambitions.

The main dilemma for Beijing office worker Tiana Chen when she bought the Xpeng electric for 180,000 yuan ($ 27,000) crossover She was wondering if she should go to BYD car or Nio instead. She wasn’t serious about Marquez abroad.

“If I had bought a petrol car, I might have been thinking about a foreign brand,” she said on her way home from work. “But I wanted an EV. TeslaFew foreign brands have properly applied advanced smart technology. “

Supported by demand from consumers like Chen, Electric car Sales are skyrocketing in China’s largest $ 500 billion car market in the world.

In the first four months of 2022, the number of new energy passenger cars (pure EV and plug-in hybrid vehicles) more than doubled from the previous year to 1.49 million, according to data from the China Automakers Association.

Overall vehicle sales fell 12%, reflecting cleaner technology occupying 23% of China’s passenger car market and a sharp drop in demand for gasoline vehicles.

According to data from the China Passenger Car Association, the top 10 automakers in this year’s new energy vehicle (NEV) segment have no foreign brands, with the exception of Tesla, a pioneer of electric vehicles in the United States.

From BYD and Wuling to Chery and Xpeng, the rest are all Chinese brands. BYD, a leader in China, has sold about 390,000 EVs domestically this year. That’s more than three times the world leader Tesla. The top-ranked traditional car maker is a Volkswagen venture with FAW Group, which ranks 15th in EV sales.

Chen, overseas Marquez, Buick Velite 7 or Volkswagen ID. The series couldn’t provide what she was looking for. An EV that can give her the “comfort” of having a smartphone-like experience in her car.

“Foreign brands are far from my life and lifestyle,” said Digital, which handles connections to apps like Alipay and Taobao and “does everything from opening windows to turning on music.” Assistant Cheng says. Meanwhile, her car software updates the air.

That’s a pretty reversal. Since the 1990s, global brands have dominated China, with a 60-70% share of passenger car sales in recent years. In the first four months of 2022, they gained 52% and their monthly share in April was 43%.

Shows the scale of the challenges facing traditional automakers Nissan Makoto Uchida said Reuters Some brands “may disappear in three to five years” in China.

“Local brands are getting stronger,” said Uchida, a former Nissan chief in China, adding that the quality of EVs from Chinese manufacturers has improved rapidly and progress has been made in the coming months. ..

“There are many changes in China that require careful monitoring,” he added, adding that automakers must be agile in designing, developing and launching new models.

“In those respects, if we are late, we will be left behind.”

“High-tech native”

Former Bill Russo Chrysler An executive who now heads Shanghai-based consultancy Automobility said global brands need to quickly turn around as they dominate less than 20% of China’s only growing car market.

“Chinese brands are winning the competition for EVs,” Russo said, and it seems irreversible for consumers to shift to cars that are essentially four-wheeled smartphones, traditional automakers. Added that he was having a hard time catching up.

“I think this is a long-term shift to high tech,” he said of consumer demand for a “user-centered digital service experience” focused on interfaces, connectivity, and apps.

“Traditional companies are not high-tech natives.”

Volkswagen Group brands, including Volkswagen Audi, Bentley, LamborghiniWith Porsche SkodaAlongside General Motors’ marks such as Buick, Chevrolet and Cadillac, it has been a market leader for most of the last 20 years.

According to LMC Automotive, last year in China, the two global groups had about 13% and 12% share of the automotive market, respectively.Detroit giant GM It also holds a 44% stake in a locally managed SAIC-GM-Wuling Auto (SGMW) venture, including sales by group number, but SGMW does not manufacture American brands. , Wuling and Baojun only manufacture cars.

GM is currently focused on attracting young buyers in big cities that have been mostly snubbing models so far, according to two people familiar with the car maker’s business in China.

The group has announced plans to spend more than $ 35 billion worldwide by 2025. This includes over 30 new EVs, of which over 20 are in China. Cadillac lyric Crossover SUV..

Following the launch of Lyriq, two sources say, an electric Buick SUV and a smaller, sportier electric crossover will follow. Both are planned earlier this year.

According to LMC Automotive, Buick sales have fallen 32% over the past five years to 828,600 units in 2021, and Chevrolet has fallen more than half to 269,000 units.

GM said Reuters China aims to introduce the capacity to produce 1 million EVs a year by 2025, and demand for the Buick Velite NEV family and Chevrolet Menlo EVs will be “significant” in 2021 and the first three months of this year. Increased to. “

It is said that it has introduced smart technologies such as hands-free driver support on highways, “aviation grade” cyber security, and wireless software updates.

Autobahn speed?

Volkswagen, which has spent about $ 55 billion on EVs worldwide by 2026, has launched a new generation of IDs. We announced the series in China early last year, but last year we failed to meet our goal of selling 80,000-100,000 cars. We aim to sell 160,000 to 200,000 IDs. Only 33,300 units were sold this year until April.

According to one of the people close to GM and a Volkswagen insider, the main concern for foreign brands is that their new EV is designed for the American and European markets with a focus on performance and durability. That is.

“Autobahn speeds? In most big cities in China, traffic is so heavy that you can’t even drive at speeds above 60 km / h most days,” the car manufacturer’s product planning and product development process said. A source close to the GM who is familiar with it says. ..

Volkswagen says China’s NEV demand is “Smart car“The theme, he added, was investing in local R & D, especially software.

“Our strategy enables us to reach our ambitious goals in China. By 2030, we will also be the market leader in electronic vehicles and Volkswagen will continue to be number one in China in the future. We want to ensure that it will continue to exist, “he added.

The challenge for global brands is to find formulas to beat consumers in big cities with disposable income, such as Chen in Beijing and Li Huayuan, a civil engineer in Shanghai.

Lee Seung-yuop, who bought a BYD electric sedan for 290,000 yuan last year, was half-heartedly thinking about Japanese and German brands. insurance..

“When it comes to American brands, only Tesla seems to stand out,” he said from a BYD car parked in the Sichuan provincial city of Mianyang, where he is working on the project. “Other brands don’t seem competitive to me.”

($ 1 = 6.6499 Chinese RMB)

(Report by Norihiko Shirotsu, Zoey Zhang in Shanghai, Kevin Krolicki in Singapore, additional report by David Dolan in Tokyo, edited by Pravin Char)

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