Chinese automakers will miss out on the EV boom if they don't adapt quickly

China's new energy vehicle giant will unveil the latest version of its Han electric sedan at the Beijing Motor Show on April 26, 2024.

CNBC | Evelyn Chen

BEIJING — Chinese automakers, including state-owned auto giants GAC Groupif we are to survive, we cannot afford to sit back and relax on this country's electric car boom.

In China, the introduction of battery cars and hybrid cars is rapidly increasing, but price competition is intensifying due to the onslaught of new models. tesla Also lower price. Chinese automakers are also looking to grow overseas, but other countries are increasingly wary of the impact these cars will have on the domestic auto industry, prompting them to invest in local production. In China's already highly competitive EV market, it is a situation of survival of the fittest.

“The speed of elimination will further accelerate,” GAC general manager Feng Xingya told reporters on the sidelines of the Beijing Auto Show in late April. According to a CNBC translation of his remarks in Mandarin:

Feng said GAC cut car prices a week before China's Labor Day holiday on May 1, and price competition led to weak sales in the first quarter. The company's first-quarter operating revenue decreased year-over-year for the first time since 2020, according to Wind Information.

Feng said that to remain competitive, GAC is working on research and development internally while partnering with high-tech companies such as Huawei. The company is a joint venture partner of Honda and Toyota in China and has an electric vehicle brand called Aion.

“In the short term, if the product isn't good, consumers won't buy it,” Fenn said. “We have to use the best technology and the best products to meet consumer needs. In the long run, we have to have a core competitive advantage.”

Expansion outside China

Like other Chinese automakers, GAC is looking overseas. According to data from the China Passenger Vehicle Association, domestic sales of new energy vehicles, including battery-only vehicles and hybrid vehicles, were growing at a slower pace in March than in December.

Last year, GAC revamped its overseas strategy with the ultimate goal of selling 1 million vehicles overseas, including electric, hybrid and fuel-powered vehicles, said Wei Haigang, general manager of GAC's international vehicle sales and service business. He said this in an interview with CNBC last week.

The company still has a long way to go. According to Wei, only about 50,000 cars were exported last year. However, he said his goal this year is to double that to at least 100,000 units and reach 500,000 units by 2030, and that sales targets and sales strategies are aimed at different regions of the world starting with the Middle East and Mexico. He said there was.

“We are currently doing our best to accelerate our overseas expansion,” he said in Mandarin, as translated by CNBC.

China's overseas car sales soared last year, and it now ranks with Japan in terms of global car sales. largest car exporter. Last year, the European Union and the United States announced investigations into Chinese-made electric vehicles as part of efforts to encourage consumers to move away from fuel-powered cars.

Factories become global

Mr. Wei said that part of GAC's international strategy is to localize production, noting that the company has adopted various approaches such as joint ventures and technology alliances. He said GAC plans to open a factory in Malaysia in April and another in Thailand in June, and is also considering Egypt, Brazil and Turkey.

Wei said GAC plans to open eight subsidiaries this year, including one in Amsterdam. However, the United States is not part of the company's near-term international expansion plans, he said.

The difference now is that overcapacity is coupled with highly competitive vehicles.

Stephen Dyer

AlixPartners, Greater China Business Co-Leader

U.S. and European officials have emphasized in recent months the need to address issues such as: China's “excess production capacity” This can be loosely defined as the state-supported production of goods in excess of demand. China has played down these concerns, with the country's Commerce Ministry insisting that new energies face a capacity shortage from a global perspective.

“China's auto industry has always had overcapacity,” said Stephen Dyer, co-leader of consulting firm AlixPartners' Greater China practice and Asia leader for automotive and industrial sectors.

“The difference today is that we have excess capacity coupled with very competitive vehicles,” he told CNBC on the sidelines of the auto show. “So we were surprised to find in our EV survey that approximately 73% of U.S. consumers can recognize at least one Chinese EV brand, with Europe following closely behind.”

Dyer expects that to drive overseas demand for China's electric vehicles. According to research by AlixPartners, BYD Highest brand awareness across major countries in the US and Europe, followed by Nioh and leap motor.

BYD Exported 242,000 cars Last year, we were also building a factory overseas. The company's sales are broadly divided into hybrid vehicles and battery-powered vehicles. BYD has discontinued sales of traditional fuel-powered passenger cars.

technology competition

In addition to prices, this year's Beijing auto show reflected how Chinese and foreign companies are competing on technology fronts such as driver-assistance software.

Citing research from AlixPartners, Dyer said Chinese consumers value technology features almost twice as much as their U.S. counterparts.

He noted that Chinese startups are so aggressive that cars equipped with the new technology could be sold even if there are problems with the software. “They know they can use over-the-air updates to quickly fix bugs or add features if needed,” Dyer says.

Interest in technology doesn't mean consumers are selling battery-only cars. Dyer said that in the short term, consumers are still concerned about range, which is not only due to the demand for hybrid cars, but also because their batteries are often used without charging. He said that it means that.

flat Volkswagen We are entering the “smart tech” race. The German auto giant said at an auto show that its joint venture with Shanghai's state-run SAIC Motor Corporation has teamed up with the automotive arm of Chinese drone company DJI to develop driver assistance systems for cars. The newly released Tiguan L Pro.

According to CNBC's Chinese translation, early versions of the SUV will run on fuel, and the company's tagline is “Whether it's oil or electricity, it's smart.”

battery manufacturer Quatre Zhong Shi, an analyst at the China Automobile Dealers Association, said the company may have been trying to encourage consumers to buy cars equipped with its batteries, which have become more visible this year as competitors' market share expands. He said he had set up an exhibition booth.

Automotive chip companies Black Sesame and Horizon Robotics also had booths inside the main exhibition hall.

what customers want

lotus technologyA British luxury car brand acquired by geelysurveyed customers and found that self-parking and battery charging, which allow drivers to remain in their cars, were the most requested features.

Chief Financial Officer (CFO) Alexius Kuen Long Lee said this in an interview with CNBC on the sidelines of the Beijing Auto Show. He noted that the company is currently installing robot chargers in Shanghai.

Lotus and Nio also last week. strategic partnership upon Battery exchange And charging.

Mr Li, who has worked in China since 1998, said: “There is a passing of the baton where Chinese brands are getting much bigger and more powerful, while foreign brands are still trying to decide the best energy route. I think it is,” he said. Are they still deciding about PHEVs, are they still thinking about BEVs, are they still thinking about internal combustion engine vehicles? The whole decision-making process has become very complex and very internally I think the decision just hasn't been made because there's a lot of resistance. It's productive. ”

But he believes Lotus has found the right strategy by expanding its product line and focusing squarely on battery-powered cars. “Lotus today is similar to the international brand position,” he said. [was] In China, it probably dates back to 2000. ”

Summarize this content to 100 words China's new energy vehicle giant will unveil the latest version of its Han electric sedan at the Beijing Motor Show on April 26, 2024.CNBC | Evelyn ChenBEIJING — Chinese automakers, including state-owned auto giants GAC Groupif we are to survive, we cannot afford to sit back and relax on this country's electric car boom.In China, the introduction of battery cars and hybrid cars is rapidly increasing, but price competition is intensifying due to the onslaught of new models. tesla Also lower price. Chinese automakers are also looking to grow overseas, but other countries are increasingly wary of the impact these cars will have on the domestic auto industry, prompting them to invest in local production. In China's already highly competitive EV market, it is a situation of survival of the fittest.”The speed of elimination will further accelerate,” GAC general manager Feng Xingya told reporters on the sidelines of the Beijing Auto Show in late April. According to a CNBC translation of his remarks in Mandarin:Feng said GAC cut car prices a week before China's Labor Day holiday on May 1, and price competition led to weak sales in the first quarter. The company's first-quarter operating revenue decreased year-over-year for the first time since 2020, according to Wind Information.Feng said that to remain competitive, GAC is working on research and development internally while partnering with high-tech companies such as Huawei. The company is a joint venture partner of Honda and Toyota in China and has an electric vehicle brand called Aion.”In the short term, if the product isn't good, consumers won't buy it,” Fenn said. “We have to use the best technology and the best products to meet consumer needs. In the long run, we have to have a core competitive advantage.”Expansion outside ChinaLike other Chinese automakers, GAC is looking overseas. According to data from the China Passenger Vehicle Association, domestic sales of new energy vehicles, including battery-only vehicles and hybrid vehicles, were growing at a slower pace in March than in December.Last year, GAC revamped its overseas strategy with the ultimate goal of selling 1 million vehicles overseas, including electric, hybrid and fuel-powered vehicles, said Wei Haigang, general manager of GAC's international vehicle sales and service business. He said this in an interview with CNBC last week.The company still has a long way to go. According to Wei, only about 50,000 cars were exported last year. However, he said his goal this year is to double that to at least 100,000 units and reach 500,000 units by 2030, and that sales targets and sales strategies are aimed at different regions of the world starting with the Middle East and Mexico. He said there was.”We are currently doing our best to accelerate our overseas expansion,” he said in Mandarin, as translated by CNBC.China's overseas car sales soared last year, and it now ranks with Japan in terms of global car sales. largest car exporter. Last year, the European Union and the United States announced investigations into Chinese-made electric vehicles as part of efforts to encourage consumers to move away from fuel-powered cars.Factories become globalMr. Wei said that part of GAC's international strategy is to localize production, noting that the company has adopted various approaches such as joint ventures and technology alliances. He said GAC plans to open a factory in Malaysia in April and another in Thailand in June, and is also considering Egypt, Brazil and Turkey.Wei said GAC plans to open eight subsidiaries this year, including one in Amsterdam. However, the United States is not part of the company's near-term international expansion plans, he said.The difference now is that overcapacity is coupled with highly competitive vehicles.Stephen DyerAlixPartners, Greater China Business Co-LeaderU.S. and European officials have emphasized in recent months the need to address issues such as: China's “excess production capacity” This can be loosely defined as the state-supported production of goods in excess of demand. China has played down these concerns, with the country's Commerce Ministry insisting that new energies face a capacity shortage from a global perspective.”China's auto industry has always had overcapacity,” said Stephen Dyer, co-leader of consulting firm AlixPartners' Greater China practice and Asia leader for automotive and industrial sectors.”The difference today is that we have excess capacity coupled with very competitive vehicles,” he told CNBC on the sidelines of the auto show. “So we were surprised to find in our EV survey that approximately 73% of U.S. consumers can recognize at least one Chinese EV brand, with Europe following closely behind.”Dyer expects that to drive overseas demand for China's electric vehicles. According to research by AlixPartners, BYD Highest brand awareness across major countries in the US and Europe, followed by Nioh and leap motor.BYD Exported 242,000 cars Last year, we were also building a factory overseas. The company's sales are broadly divided into hybrid vehicles and battery-powered vehicles. BYD has discontinued sales of traditional fuel-powered passenger cars.technology competitionIn addition to prices, this year's Beijing auto show reflected how Chinese and foreign companies are competing on technology fronts such as driver-assistance software.Citing research from AlixPartners, Dyer said Chinese consumers value technology features almost twice as much as their U.S. counterparts.He noted that Chinese startups are so aggressive that cars equipped with the new technology could be sold even if there are problems with the software. “They know they can use over-the-air updates to quickly fix bugs or add features if needed,” Dyer says.Interest in technology doesn't mean consumers are selling battery-only cars. Dyer said that in the short term, consumers are still concerned about range, which is not only due to the demand for hybrid cars, but also because their batteries are often used without charging. He said that it means that.flat Volkswagen We are entering the “smart tech” race. The German auto giant said at an auto show that its joint venture with Shanghai's state-run SAIC Motor Corporation has teamed up with the automotive arm of Chinese drone company DJI to develop driver assistance systems for cars. The newly released Tiguan L Pro.According to CNBC's Chinese translation, early versions of the SUV will run on fuel, and the company's tagline is “Whether it's oil or electricity, it's smart.”battery manufacturer Quatre Zhong Shi, an analyst at the China Automobile Dealers Association, said the company may have been trying to encourage consumers to buy cars equipped with its batteries, which have become more visible this year as competitors' market share expands. He said he had set up an exhibition booth.Automotive chip companies Black Sesame and Horizon Robotics also had booths inside the main exhibition hall.what customers wantlotus technologyA British luxury car brand acquired by geelysurveyed customers and found that self-parking and battery charging, which allow drivers to remain in their cars, were the most requested features.Chief Financial Officer (CFO) Alexius Kuen Long Lee said this in an interview with CNBC on the sidelines of the Beijing Auto Show. He noted that the company is currently installing robot chargers in Shanghai.Lotus and Nio also last week. strategic partnership upon Battery exchange And charging.Mr Li, who has worked in China since 1998, said: “There is a passing of the baton where Chinese brands are getting much bigger and more powerful, while foreign brands are still trying to decide the best energy route. I think it is,” he said. Are they still deciding about PHEVs, are they still thinking about BEVs, are they still thinking about internal combustion engine vehicles? The whole decision-making process has become very complex and very internally I think the decision just hasn't been made because there's a lot of resistance. It's productive. ”But he believes Lotus has found the right strategy by expanding its product line and focusing squarely on battery-powered cars. “Lotus today is similar to the international brand position,” he said. [was] In China, it probably dates back to 2000. ”
https://www.cnbc.com/2024/05/03/chinas-automakers-must-adapt-quickly-or-lose-out-on-the-ev-boom.html Chinese automakers will miss out on the EV boom if they don't adapt quickly