China, the world’s second-largest economy and the largest car market, is preparing itself for a ‘new normal’. It is also preparing to do business with a modified approach and some new set of capabilities to compete successfully in the world.
China wants to be the leading hub for technology in the areas of electric vehicles and connected cars. Electric vehicles (EVs) or New Energy Vehicles (NEVs) as they are called here, sold over 330,000 units in 2015, a 279 percent jump over 87,000 units sold in 2014. That makes China the second largest EV market in the world. The USA is the largest.
Growing competition, both in the domestic and export markets, and a slowing growth rate have made Chinese OEMs, many of whom have been dependent on joint ventures with global OEMs in China, look at ways to reinvent themselves. Also, with the central government clear policy to promote EVs, thanks to pollution levels reaching alarming levels in many parts of the country, the industry sees this as a good opportunity to enhance their capabilities and compete better in the ‘level playing field’ of electric vehicles, where no player has a huge advantage in terms of history of building electric vehicles. The field becomes even more level when the mega trend of connectivity is added. “We have our own IP. Our scale is big enough to support development of NEVs,” says Wang Xia, chairman, China Council for the Promotion of International Trade, Automotive Committee.
NEV-er say never
Experts say that the focus on NEVs along with connected cars by the Chinese industry is a smart move as the chances of success in this field are better than in the conventional market of vehicles with internal combustion engines.
What is helping Chinese vehicle manufacturers and suppliers to develop new age mobility solutions is also the huge amount of big data from the base of 660 million internet users, and a large number of tech savvy young customers in the country. “We have been investing in NEV technology for over a decade,” says Shu Youxing, GM, BYD Auto Sales. He says BYD has 16,000 engineers with 12,000 patents! BYD wants to “promote Chinese technology globally”. And this company is not the only one to have such a goal. Speeches by many top representatives of Chinese OEMs at the Global Automotive Forum in Chongqing, which opened yesterday, reflected similar ambitions. Chinese OEMs are joining hands with domestic internet companies to develop connected and driverless cars. BYD signed a “strategic cooperation” pact with Chinese company Alibaba in July last year. Baidu, a major internet company in China, is also working on driverless car technology.
Even as the big data generated by the 660 million internet users in China may sound impressive, Jack Perkowski, founder and managing partner, JFP Holdings, points out that the number is set to grow significantly as internet penetration in China stands at 52 percent currently. Perkowski has been operating in China since 1992 and has seen the evolution of the Chinese automobile industry, which has grown from 1.5 million units in 1995 to 25 million units last year.
General Motors, which is a leading player in the Chinese car market, sees a “confluence of connectivity, electrification, sharing and autonomous technologies” in the coming years. “Efficiency is going to be the driver of change,” says Michael Ableson, VP – strategy and global portfolio planning, General Motors. It won’t be surprising if China becomes GM’s biggest market for such solutions too.
Suppliers bullish on connected and driverless cars
Suppliers are bullish about the prospects of China in the arena of connected and autonomous driving cars. Simon Yang, president, Delphi China, says, “China can emerge as the first market for fully automated driving.” “Young customers demand new technologies way faster than guys like me and they are even more demanding compared to mature markets,” says Enno Tang, head of chassis & safety division, Continental China. What also makes suppliers and vehicles manufacturers bullish about China’s chances of taking a lead in the global market for new technologies like EVs and autonomous/connected vehicles are the central government’s strong push on NEVs, consumer demand for new technologies and, fast adoption of new trends.
As China enters its 13th Five-Year Plan period, its automotive industry is preparing for some major changes. As SAIC’s Zhixin, inspired by a Chinese novel Besieged City, says, “We are like residents in a besieged city. We are trying a build a new city.” SAIC, and some others, are trying to transform from conventional manufacturing companies to comprehensive service providers.
You may like: India surpasses China in passenger car exports