News Survey | Where Does The International Competitive Advantage Of China's New Energy Vehicles Come From?

Recently, the European Union issued a notice to register electric vehicles imported from China with customs, and may impose "retrospective tariffs" on related vehicles in the future; The UK and the US are preparing to conduct anti subsidy investigations or national security risk investigations on Chinese electric vehicles. Chinese electric vehicles are facing a "headwind" when going global. On the one hand, it reflects that some countries are engaging in protectionism and trade barriers under the pretext of "fair competition" and "national security", which violates the principles of market economy and WTO rules. On the other hand, it also reflects the increasingly strong international competitiveness of China's new energy vehicle industry.

Xinhua News Agency reporters recently conducted on-site investigations and found that the international competitive advantage of China's new energy vehicle industry is not supported and protected by subsidies, but rather stems from factors such as high supply chain integrity and industry clustering, sufficient market competition, and rapid technological iteration promoted by the large market size. Chinese new energy vehicles not only provide diversified consumption choices for global consumers, but also help more countries achieve green and low-carbon transformation and sustainable development. The first mover advantage of China's automotive industry in transitioning to new energy is being transformed into a new driving force for the global automotive industry's transformation.

This is the interior of NIO's second advanced manufacturing base captured on October 11, 2023. Shen Jizhong

Complete supply chain with high industry clustering

China has the most complete industrial system in the world, with its manufacturing scale ranking first in the world for more than ten consecutive years. This advantage is reflected in the new energy industry, which has a full industry chain covering material research and development, engineering design, manufacturing management, and final assembly integration, forming a group of automobile industry clusters that meet the requirements of "domestic circulation as the mainstay and domestic and international dual circulation mutually promoting".

Some regions in China where the new energy vehicle industry is developing rapidly have basically formed regional industrial chain and supply chain systems, creating an industrial ecology driven by vehicle enterprises, supporting advanced intelligent connected industrial chains, and superior industrial policy environments.

In Hefei City, Anhui Province, the layout of new energy vehicles is comprehensive, forming an industrial cluster of six major vehicle enterprises including state-owned enterprises, private enterprises, new forces in car manufacturing, and foreign-funded enterprises, with an industrial chain output value exceeding 100 billion yuan. One of the main reasons why whole vehicle companies are willing to settle in Hefei is that the local industrial chain has a strong correlation with the automotive industry, with strong production capabilities for related products such as display screens, chips, artificial intelligence, batteries, etc. For example, the chip and integrated circuit industry in Hefei has developed rapidly from scratch. Last year, the number of related enterprises exceeded 400, and the output value of integrated circuits exceeded 50 billion yuan.

Power batteries are the most competitive link in the new energy vehicle industry chain in Changzhou, Jiangsu Province. According to the information provided by the Changzhou Municipal Government, if the power battery industry chain is broken down into 32 main links, Changzhou has gathered 31 of them, and the completeness of the industry chain is close to 97%. From positive and negative electrodes, separators, electrolytes to battery cells, Changzhou has more than 30 leading enterprises in national and even global sub sectors, with an industrial scale of over 170 billion yuan.

The improvement and aggregation of the new energy vehicle industry chain and supply chain, as well as the construction of supporting infrastructure such as charging facilities, have provided strong support for the development and growth of China's new energy vehicles. In February 2022, the cumulative production of new energy vehicles in China exceeded 10 million units, and in July 2023, it exceeded 20 million units. From the first vehicle to the 10 millionth, it took 27 years; And from the 10 millionth to the 20 millionth, it only took 17 months.

Qin Lihong, co-founder and president of NIO, believes that people ultimately determine the number and quality of R&D hours, and China is the country with the highest concentration of applied R&D talents. Researching a motor requires 100000 working hours, and the cost per hour of our research and development is several times higher than that of the West. The research and development of new energy vehicles is gathering in China

In 2023, Volkswagen Group will relocate its largest research and development center outside of its headquarters in Germany to Hefei. In recent years, Volkswagen Group has continued to increase its layout in Hefei, establishing a vehicle manufacturing base, setting up a wholly-owned R&D company, and building a battery system factory, committed to building Hefei into an advanced production, R&D, and innovation center for new energy vehicles outside of Germany. Volkswagen Group (China) Chairman and CEO Beryl stated that Volkswagen is fully integrating into China's industrial ecosystem. In a dynamic market environment, rapid development is the key to maintaining competitiveness

The Swiss newspaper Neuz Zurich recently published a commentary stating that a comprehensive ban on Chinese technology is not in line with free market principles. Competitors from China can bring benefits to the West, as they can stimulate the motivation of Western companies. For example, "Volkswagen Germany did not open a huge research and development center in Hefei for no reason.

The final assembly production line of Xiaopeng Automotive Intelligent Connected Technology Industrial Park in Zhaoqing, Guangdong, captured on October 9, 2023. Photo by Deng Hua, Xinhua News Agency reporter

Large market size, rapid and efficient technological iteration

The market size of China's new energy vehicle industry is huge and has strong growth potential. According to data from the China Association of Automobile Manufacturers, the production and sales of new energy vehicles in China will increase by 35.8% and 37.9% year-on-year in 2023, respectively, with a market share of 31.6%. At that time, the sales of new energy vehicles in China accounted for nearly 65% of the total global sales of new energy vehicles. China has been ranked first in global new energy vehicle production and sales for nine consecutive years.

The huge consumer market and diverse driving environment in China provide the soil for the research and development, iteration and upgrading of new energy vehicle technology. Whether it is a commuter car priced at tens of thousands of yuan or a mainstream "national car" priced at hundreds of thousands of yuan, new energy vehicles of all levels can find development space. Meanwhile, due to the higher acceptance of automotive intelligence and new technologies by Chinese consumers, many car companies have taken the lead in launching new products and technologies in the Chinese market.

Compared to traditional cars, new energy vehicles have weakened technical requirements for traditional powertrains such as engines and transmissions, and instead require "three electric" technologies and components such as batteries, motors, and electronic controls, as well as charging and swapping infrastructure. The automotive industry is moving towards electrification, intelligence, networking, and digitization. Compared to traditional Western car companies, Chinese car companies have advantages such as lighter burdens, fewer concerns, and faster turnaround times. After nearly 20 years of practice, China's new energy vehicle industry has formed innovative thinking and innovation capabilities, achieved leapfrog development, and continuously improved in core technologies. BYD Co., Ltd. Chairman and President Wang Chuanfu said, "BYD has a technology 'fish pond', which contains various technologies. When the market needs them, we will take one out

Chinese new energy vehicle products have gained market recognition, thanks to the empowerment of intelligent technologies such as intelligent driving and intelligent cockpit. From a global perspective, Chinese companies have demonstrated advantages in both mass production level and iteration speed, with faster and more efficient iteration innovation cycles.

Industry insiders point out that over 40% of the components for smart electric vehicles are new categories that fuel vehicles do not have. Many components for the three electric system, intelligent driving, and intelligent cockpit can only be achieved through innovative supply chains.

Matthias Midreich, CEO of electric vehicle supply chain company and Belgian high-tech material company Umicore, said that Chinese electric vehicles are good enough to attract consumers.

Chinese Minister of Commerce Wang Wentao stated at the roundtable meeting of Chinese electric vehicle companies in Europe held in Paris, France on the 7th that Chinese electric vehicle companies rely on continuous technological innovation, a sound production and supply chain system, and sufficient market competition to develop rapidly, rather than relying on subsidies to gain competitive advantages. The accusations of "overcapacity" by the US and Europe are unfounded. The development of China's electric vehicle industry has made significant contributions to the global response to climate change and green low-carbon transformation.

On February 28th, in Cape Town, the legislative capital of South Africa, people boarded a BYD electric bus at the bus terminal. Xinhua News Agency (Photo by Habiso Makabera)

Providing consumers with diversified choices to assist in the transformation of the global automotive industry

Relying on technological innovation and excellent quality formed in global market competition, Chinese new energy vehicles are widely popular in Europe. The Financial Times recently reported that a study by the European environmental group Transport and Environment Organization shows that a quarter of electric vehicles sold in the EU in 2024 will be made in China, significantly higher than last year's 19.5%. Among them, Chinese brand electric vehicles will account for 11% of the EU electric vehicle market, and this proportion will increase to 20% by 2027. The report quoted Julia Poliskanova, the policy director of the organization, as saying, "Tariffs cannot protect traditional car manufacturers in the long run

The German Economic Weekly recently published a commentary article titled "Chip Sanctions - We Can't Learn from the United States", stating that trade protectionism almost always distorts market relations, is ineffective and costly.

Michel Van Ratingen, Secretary General of the European New Car Assessment Regulation, stated that as more and more Chinese new energy vehicles enter the European market, European consumers have more choices. The achievements of Chinese car companies in Europe are directly related to their progress in technological innovation, safety assurance, green environmental protection, and quality improvement.

Mike Hosh, CEO of the Association of British Automobile Manufacturers and Traders, said that British consumers are open to more and more Chinese car brands entering the UK market. More Chinese car brands entering the UK market is beneficial for both consumers and the automotive industry - healthy competition not only lowers electric vehicle prices but also promotes industry innovation.

The participation of Chinese new energy vehicle industry chain upstream and downstream enterprises in the construction of the "Battery Valley" in the Upper France region in northern France has attracted much attention. In the central part of the "Battery Valley" in L ü tz, two battery box production lines jointly invested by China Minsheng Group and France's Renault Group in 2023 have started production. Jean Luc Bouvard, the manager of the Renault L ü tz plant, told Xinhua News Agency that the production line was installed in less than three months, and the joint venture is stepping up the production of battery boxes for Renault's new electric vehicles.

Yang Pitole, CEO of the Investment Promotion Agency in Northern France, said, "Chinese companies have achieved real leading advantages in battery technology and electric vehicles. We sincerely hope to establish partnerships with Chinese companies and benefit from their advanced technologies

In February of this year, Xiaopeng Motors and Volkswagen signed a cooperation agreement to accelerate the development of electric vehicles, marking another step forward in their partnership established in July last year. Volkswagen Group (China) Chairman and CEO Beryl stated that through their collaboration with Xiaopeng, they have not only accelerated their research and development speed, but also improved efficiency and optimized their cost structure.

Rob Deron, the head of the Sustainable Transport Department of the United Nations Environment Programme, recently stated that China is a leader in electrification and the promotion of electric vehicles. He hopes that China can share its experience with the world, especially the global South, and use Chinese technology to promote affordable electric vehicles to the world.