Decoding China: The race to electric vehicle dominance

•  DANG YUAN

CHINA: Chinese electronics manufacturer Xiaomi plans to deliver its first electric vehicle in China on March 28, three years after the company first pitched its idea for a battery-powered sports car. Now, premium car manufacturers in the US and Germany will have to deal with another competitor from the Far East. China has long been the world’s largest manufacturer of electric cars. E-mobility would be unimaginable without innovations from Chinese companies, this includes many electronics companies that were not originally focused on the automotive industry.

Electronics companies trying to cross over into car making is not limited to China. The Californian company Apple also had the idea of producing cars 14 years ago. However, at the end of February 2024, the iPhone manufacturer from Cupertino announced that the “Apple Car” project had finally been discontinued. The company is said to have invested a total of $10 billion.

China is the largest and fastest growing car market in the world. Germany’s major car manufacturers sold around one in three cars worldwide in 2023. But their market position is now being challenged by domestic e-car manufacturers. “China leads the global supply chain for lithium-ion batteries,” said Bernd Diepenseifen, partner at the consulting firm KPMG.

In terms of battery production, industrial innovation and sales, China is clearly number one on the scale of competitiveness. “Asian suppliers have a dominant position here, at least for the time being,” he added. And for German car makers, things are not moving in the right direction. “The production of raw materials is certainly not a field in which German suppliers are sensibly looking for opportunities, nor is battery production,” said Diepenseifen.

The high standards China’s car makers are aiming for became even more clear at the Geneva International Motor Show in February.

Not a single car manufacturer from Germany was present, but there were plenty from China. Exhibition vehicles demonstrated a new generation of connected cars, with entertainment packages integrating audio and video streaming services, and navigation that indicates with a countdown when the next traffic light turns green. China’s automobile industry today is looking at cars more than as a mere means of transportation. Cars are more than just an engine plus gearbox, and e-mobility is not just a chassis with a socket.

China is thinking ahead with emphasis on automated driving and artificial intelligence, an environmentally friendly transportation concept and technological leadership in industrial production.

This is why electronics and telecommunications giants like Huawei and Xiaomi are positioning themselves in this competitive market.

“Currently, cars are ‘mobile data centers’,” said Xiaomi boss Lei. “The automotive industry of the future will produce advanced and connected ‘smart spaces’.”

Chinese EV maker NIO has called its cars a “living room on wheels.” At the IAA 2023 motor show in Munich, Wan Gang, China’s former research minister, enthused that electric cars could be used to store energy in the power grid when charging and discharging. “For production and the vehicle of the future, ‘smart’ is the next big step,” said Jürgen Unser, who was President of Audi China until January 2024. This includes smart cars, smart production and smart infrastructure.