Lei Jun, CEO of Chinese smartphone manufacturer Xiaomi, at the opening of the Auto China motor show on April 25, 2024 in Beijing (AFP/Jade Gao)
Foreign automakers, struggling in China amid a new generation of local electric vehicle makers, are seeking to cooperate with Chinese tech giants to stay competitive in the world’s largest electric market.
At the Beijing Motor Show at the end of April, foreign companies announced technology partnerships, such as Japanese Nissan and Toyota, respectively with Chinese tech behemoths Baidu and Tencent.
Traditional automakers “are notoriously conservative companies,” says Tu Le, director of consulting firm Sino Auto Insights.
“They have tried to invest in cutting-edge technologies (…) but it does not come naturally,” he relates. “They are being forced to try to be more open-minded about technology because of the changing market in China and new entrants into the sector – companies like Xiaomi and Huawei” known for their high-tech products.
These traditional companies are now engaged in a price war against a hundred Chinese electric brands which compete to offer the most attractive prices and the most advanced features.
“In general, foreign automobile manufacturers in China, particularly Japanese manufacturers, have really been (…) hard done by over the last 12 to 18 months on the Chinese market”, explains Gregor Sebastian to AFP, electrical analyst and expert at Rhodium Group, an independent research company.
“They lost market share quickly (…) This is linked to intense Chinese competition from manufacturers like BYD but also from numerous electric start-ups,” adds the expert.
BYD, the undisputed heavyweight in the sector in China, beat the American Tesla in the 4th quarter of 2023 to become the world’s leading seller of electric vehicles.
– Innovations and data –
Foreign companies must therefore compete in inventiveness to strengthen their positioning in a market dominated by lower-cost, high-tech vehicles. When it comes to electricity, intelligent technologies seem essential.
A BYD 07 EV electric car on display at the Auto China Motor Show on April 25, 2024 in Beijing (AFP/Pedro Pardo)
Foreign manufacturers are seeking to form partnerships with local tech companies not only to benefit from their innovations, but also to access the data collected by vehicles in China, essential to improve their performance and intelligent features, particularly based on technology. ‘artificial intelligence.
Beijing has in fact strengthened its control over foreign companies’ access to information it considers sensitive, such as this data.
“China wants to show that it plays by the rules and lets foreign players access the market (…) But it does not want to give up anything on the security side,” observes Daniel Kollar of the consulting firm for AFP Intralink.
“If you want to offer particularly advanced mapping solutions in China, you need to work with a local company and license their mapping data or form a joint venture,” explains Gregor Sebastian.
– Huge potential of AI –
Japan’s Nissan presented its partnership with Baidu as a way to offer “intelligent systems and services based on artificial intelligence to customers in China and beyond.” Baidu has also started collaborating with South Korean auto giant Hyundai and Kia.
Toyota, for its part, said it was partnering with video game giant Tencent.
These Chinese companies are “experts” in their field, observes Tu Le.
“This, coupled with the fact that most manufacturers are particularly weak when it comes to digital, creates an ideal opportunity for Tencent and Baidu to move into the mobility sector.”
The Tesla factory in Shanghai, November 8, 2019 (AFP/Archives/HECTOR RETAMAL)
During a surprise visit to Beijing last week, Tesla boss Elon Musk met with senior Chinese officials and obtained an important regulatory green light from Chinese authorities on data security. This decision coincided with the signing, reported by several media, of a partnership between Baidu and Tesla for maps and navigation.
According to Gregor Sebastian, these partnerships are part of a long-term strategy aimed at remaining in a good position on the Chinese market.
“If political relations with China continue to be stable and do not deteriorate further, perhaps (foreign companies) can rely on Baidu or Tencent” for next-generation products in the 2030s, adds -he.
According to Tu Le, the potential of AI could be enormous for intelligent vehicles.
“Imagine that an autonomous system in a vehicle had access to all your history, your driving data, your purchasing habits and preferences (…) This could create ways to make you spend money” at regular intervals.
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© 2024 AFP
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