The Chinese are there
Changing of the guard in the auto industry
By Helmut Becker
September 24, 2023, 11:00 a.m
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The IAA in Munich showed it impressively: electric is king. The problem is that German car manufacturers are increasingly taking a back seat. Chinese carmakers are taking global control.
“The Chinese are coming” – was the tenor in the media before the start of the IAA Mobility in Munich. It was once the most renowned exhibition in the German automotive industry. After the end of the IAA 2023, one thing is clear: this time the car country China provided the glamor and glory. And the motto now is: The Chinese are here – and massively so! They stole the show from the German top dogs and their high-priced but very manageable range of electric cars with their cheaper electric vehicles. Experts agree: China has now achieved dominance in electromobility. China’s electric cars are competitive in all respects.
A wealth of new car brands, some of which were previously unknown to the German and European public, were on display at the IAA Mobility. Their names include: Xpeng, Nio, BYD, Geely or Ora. They were omnipresent at all trade fair stands and “open spaces”. The Chinese companies determined the character of this year’s show, for which the German industry association VDA proclaimed the motto “Electric First”. And the manufacturers willingly followed suit: the companies in the “old” car industry left their combustion engine models at home or stayed away from the trade fair altogether.
Children’s birthday party instead of a jubilation aria
The Volkswagen subsidiary Porsche hid its latest fossil high-performance sports car, the 911 S/T, limited to 1963 examples, in the “Open Space” under the unusual roof sculpture of its stand. The 60th birthday of the 911 was not a celebration, but was almost reminiscent of a child’s birthday without cake.
Instead, the sports car manufacturer drove the Porsche Mission X into the spotlight. The spectacular concept study is the reinterpretation of a hypercar with Le Mans doors that open at the top. Oh yes: And of course with a high-performance and efficient electric drive. It’s a crowd puller, but the car isn’t available to buy anywhere yet.
Despite all the studies: This year’s IAA illustrates the changing of the guard in the global automobile industry: the decades-long dominance of German car manufacturers in terms of high-performance internal combustion engines, efficiency, quality and reliability in fossil-based automobile technology is coming to an end. So far still on “quiet tires”. But with memory chips, electronics and battery drives, there is a shift in power to the Far East at the expense of German manufacturers in particular. The fact is: electric cars are in the process of displacing combustion cars. The Chinese auto industry is in the process of replacing Germany, the previous global automotive market leader, at the top.
High Noon on China’s car market
Many Chinese brands were already there at the IAA2023, others are ready to enter the market in Europe and Germany. Initially through sales partnerships or even by setting up our own sales organizations. Geely sold thousands of electric cars to the car rental company Sixt. This is also a possible path to success
The German auto industry, for its part, is losing ground in China, the world’s most important sales market. VW, market leader for decades with shares of more than 30 percent of the overall car market, had to give up its place in the sun last year. BYD now holds it. BYD? BYD! The Chinese car manufacturer was already number one in the world last year with two million electric vehicles. Before Tesla, mind you. In China, the market share of German e-brands is just two percent. An indictment. Worse still: for time and cost reasons, Volkswagen had to buy the platform for a small, competitive electric car from its partner SAIC due to a lack of its own mass. In the past, innovation transfer went the other way around.
Falling into second place?
But the German auto industry and its presumed slowness in innovation are not the only ones to blame for the changing of the guard. Climate change and the emerging state policy of banning combustion engines ultimately ensured that the rules of the game in the automobile market changed drastically. Suddenly combustion cars were the ultimate threat to the climate, while emission-free electric vehicles – regardless of whether they were powered by “dirty” or “green” electricity – were considered climate-friendly and were therefore massively promoted.
Of the 48.8 million cars in Germany, there are now almost 1.5 million purely battery-based electric cars (BEVs). The market share is still manageable, but the federal government wants 15 million electric cars to be on German roads by 2030.
It will not fail because of the offer from Chinese manufacturers. The market offensive is already underway. The proof was provided by the IAA, whose face was the car manufacturers from the Middle Kingdom. Unlike before, the quality is now good. The German auto industry should be warned. The decline of combustion engine technology is serious and so far has only cost them automotive supremacy. The combustion engine keeps them alive and brings hefty profits. For now, that doesn’t mean that the German auto industry has to be written off. But little by little she is moving into the second tier.