China’s electric vehicle manufacturers, led by No. 1-seller BYD, are using this week’s Shanghai Auto Show to call the end of the era when non-Chinese automakers such as Volkswagen and General Motors dominated the world’s largest market.
Powered by favorable central and provincial government policies, China’s domestic EV makers are leaving combustion models made by legacy Western rivals in the dust.
Established automakers used to win in China because of their superior expertise in engineering petrol vehicles. But in the new world of electric, connected cars, Chinese manufacturers and their technology partners have gotten the upper hand. China’s big battery makers have superior economies of scale, and Chinese software engineers have a better grasp of what consumers want.
EVs already dominate the premium segments in China. Now, the threat to legacy Western automakers is becoming clear in the mass-market. Among vehicles priced between $22,500 and $30,000, sales of gasoline-only vehicles have plunged 20.5% in the first quarter, while sales of EVs and plug-in hybrids have racked up a 68% gain.
Legacy automakers aren’t giving up, of course.
Volkswagen, for one, on Monday unveiled a new ID.7 electric sedan in Shanghai – and via webcast around the world – that in China will give chase to the Tesla Model 3 and domestic electric models such as the Xpeng P7 sedan. (Can electrification save sedans from the SUV steamroller? That’s to be determined.)
One telling note: VW brand chief Thomas Schaefer said the company has “listened to our customers” and given the ID.7 new connectivity technology tailored to Chinese tastes. What’s good for Germany is no longer good enough for China.
The power play by China’s EV makers in Shanghai would be noteworthy even if BYD, Geely and others had no plans to compete in other markets. But they do, and are ramping up in Europe, Latin America and other markets.
Losing in China is not the only risk legacy brands now face.
