‘As China's advances in electric vehicles, battery technology and software continue to influence the global auto industry, some European car companies are looking for a different survival strategy - becoming more Chinese. Volkswagen Group has partnered with Chinese startup Xiaopeng to develop electric cars faster and at lower cost. France's Renault has teamed up with Geely, the parent company of Volvo Cars, to develop more advanced internal combustion engine technology.’ The FT recently reported.

Looking for China ‘shortcuts’

‘What did China, Japan and South Korea do when they fell behind technologically? They chose to co-operate.’ Andy Palmer, former COO of Nissan and also former CEO of Aston Martin, said, ‘The European auto industry needs to allow Chinese companies to localise in Europe, especially in battery technology, in order to catch up with China.’

At the recent 2024 Paris Motor Show, Renault Group CEO Luca de Meo admitted that the European auto industry and suppliers ‘need some help from China,’ especially in the critical battery supply chain.

Volkswagen Group, Stellantis and others have already begun to take action, especially the Volkswagen Group, which has a deep understanding of China, acted earlier. 2017 Volkswagen Group and Jianghuai Automobile formed JAC Volkswagen, and later increased its shareholding to 75% and renamed it Volkswagen Anhui, which has become the main position for Volkswagen Group to push forward the electrification transformation in China.

In order to compete for a share of the pie in China's electrification era, the VW Group has chosen to make friends, one of which is Xiaopeng Motors. By joining hands with Xiaopeng, VW Group's electric product development cycle in China can reportedly be shortened by more than 30 per cent, and costs reduced significantly. Audi has also deepened its cooperation with SAIC to jointly develop high-end smart grid-connected pure electric models. VW Group plans to launch at least 30 pure electric models in China by 2030.

The shrewd Stellantis Group boss Tang Weishi also saw this ‘shortcut’, put forward about 1.5 billion euros to become the majority shareholder of Zero Run. In this way, Zero Run's accumulated electrification, intelligent technology, as well as the whole field of self-research and vertical integration capabilities, can all be used by Stellantis. What's more, Stellantis also controls Zero Run's overseas business and uses idle capacity to promote Zero Run's localised production in Europe. Obviously, Stellantis has chosen to exchange money for technology, which will help the company transform rapidly.

In addition, through its stake in Zero Run, Stellantis has gained a deeper understanding of China's auto industry chain. At the 2024 Paris Motor Show, Tang Weishi said that Stellantis has learned how Chinese brands develop electric vehicles by acquiring a 20 per cent stake in Zero Run. ‘We could see that if you want to compete with Chinese brands, you need the same cost structure. It's not an esoteric science and we can do it.’ He said.

For its part, Renault Group is holding Geely's hand in the hybrid and internal combustion engine sector. At the end of May this year, Renault and Geely announced the launch of their joint venture, HORSE Powertrain, in which each holds a 50 per cent stake, to develop more advanced internal combustion engine and hybrid technologies.''

Source: Autonews.com

Investment in High-Tech

It is worth noting that, in addition to the cooperation between vehicle enterprises, with the arrival of the era of intelligent electric vehicles, mastery of the ‘three electric’ core technology and intelligent Internet technology Chinese suppliers have a greater right to speak, but also actively towards the front of the stage, to attract their own technological strength to the international enterprises to throw the olive branch of cooperation.

In this context, multinational automotive enterprises and suppliers are extensively launching joint ventures with local Chinese supply chain enterprises, especially technology enterprises in the field of smart electricity and smart driving, which are highly favoured. For example, before taking a stake in Xiaopeng Automobile, Volkswagen Group invested in Guoxuan Gaoke and became its largest shareholder, and also invested in companies such as Horizon and Zhongkechuangda.

On 24 October this year, parts giant Ampofo announced that it had invested in local Chinese company MAXIEYE with about RMB 570 million, holding about 18% of the shares and becoming the largest investor shareholder of Smart Driving Technology. It is reported that Smart Driving Technology is a local Chinese intelligent driving and intelligent travelling technology service provider, with assisted driving and automatic driving system products and solutions.

Pony Smart, a Chinese autonomous driving company that recently filed an IPO prospectus with the U.S. Securities and Exchange Commission (SEC), has gone through seven rounds of financing, in which Toyota is the investor with the highest shareholding ratio and has participated in several rounds of financing. In addition, LIDAR startup WoSai Technology has also seen the same number of rounds of financing from companies such as Bosch of Germany and ON Semiconductor of the United States.

By investing in Chinese hi-tech companies in the field of smart electricity or smart driving, multinationals are placing their bets in advance as a way to make up for the shortcomings of their own business, achieve higher financial returns and build up strength for the future.

Source: News Direct.com

Competition from China should not be feared"

‘Chinese car companies have learnt how to build high-quality electric cars at lower costs.’ The Financial Times pointed out. Now, with the electrification and intelligent technology advantages of Chinese vehicle and parts companies, as well as the cost advantages of the Chinese supply chain, multinational car companies are also hoping to develop electric vehicles and smart internet technology at lower costs and more quickly.

Within the EU, some people blame the recent challenges faced by European car companies such as Volkswagen Group and Stellantis on competition from Chinese car companies, and use this as a reason to support tariff increases. In response, BMW Group Chairman Zipzer said at the 2024 Paris Motor Show that ‘we don't need protection’ and that European car companies ‘shouldn't be overly afraid’ of competition from China.

The German government has also repeatedly emphasised this view. As recently as 21 October, at the opening of Mercedes-Benz's first power battery recycling plant, German Chancellor Scholz said German carmakers should not fear competition from China. ‘Some people say that China is doing better than us in terms of electric motors ...... German companies don't have to be afraid of this competition.’ According to Scholz, the German automotive industry has been subjected to fierce competition from South Korea and Japan in the past, and there have been voices suggesting that Germany will be overtaken, but Germany has stood the test.

‘The centre of gravity of the automotive system has shifted to China. This does not mean that the Chinese will wipe us out. We can fight. We are going to compete.’ Mayo said. In fact, European car companies have already acted, either by leveraging the technology of Chinese companies or by emulating their strategies. At the 2024 Paris Motor Show, Renault, Dacia, Citroen, Volkswagen, Skoda and other European brands, have demonstrated affordable and even low-priced electric models, a number of models scheduled to go on sale in the last one or two years priced as low as 20,000 euros.

Source：cnautonews.com