Caixin Weekly | In the Intelligent-Electric Transition of Automobiles, How Can Multinational Suppliers Catch Up and Counterattack? (AI Translation)
Listen to the full version
文｜财新周刊 安丽敏
By An Limin, Caixin Weekly
文｜财新周刊 安丽敏
By Caixin Weekly An Limin
7月至10月，国内新能源乘用车零售量占比连续四个月超过50%。凭借智能电动车产品，中国本土品牌的市场份额连攀新高，10月甚至跨过70%大关。
From July to October, the retail volume share of domestic new energy passenger vehicles exceeded 50% for four consecutive months. Chinese local brands, leveraging intelligent electric vehicle products, have continually reached new heights in market share, surpassing the 70% mark in October.
大多数跨国汽车零部件供应商还没有走出燃油车时代，过去中国本土品牌也不是其主要客户。智电汽车发展越快，这类供应商的日子就越难过。
Most multinational auto parts suppliers have yet to transition from the era of fuel-powered vehicles, and in the past, Chinese domestic brands have not been their main clients. As the development of intelligent electric vehicles accelerates, these suppliers face increasingly difficult times.
- DIGEST HUB
Digest Hub
Back
- From July to October, domestic new energy passenger vehicles in China held over 50% of retail volume share, with Chinese brands exceeding a 70% market share in October.
- Technological changes in the automotive industry challenge multinational suppliers as electric vehicles replace traditional components with batteries and electric motors, affecting companies like Bosch and ZF.
- Emerging Chinese companies like CATL and Huawei grow as influential suppliers; multinational suppliers must adapt to retain their market position amid industry shifts towards intelligence and electrification.
[para. 1] From July to October, retail sales of new energy passenger vehicles in China surpassed 50%, with local brands reaching over 70% market share in October due to intelligent electric vehicles. Multinational auto parts suppliers like ZF Friedrichshafen AG and Valeo face challenges as they transition from fuel-powered vehicles, with ZF planning significant job cuts and Valeo reporting revenue declines.
[para. 2] The transformation from internal combustion engines to electric vehicles necessitates changes in the automotive supply chain. Electric vehicles lack traditional engines and transmissions, simplifying the manufacturing process and allowing domestic suppliers to compete. Companies like ZF face workforce reductions due to diminished competitive edges, as automakers increasingly integrate software and hardware for efficiency and performance, spearheading a shift towards centralized control architectures.
[para. 3] The rise of Tesla and the fast implementation of new technologies by Chinese automakers are driving the electrification and intelligence revolution. As suppliers' bargaining power weakens, companies like CATL and Huawei are emerging as new giants in the electric vehicle sector, with CATL dominating battery production and Huawei expanding in intelligent technology areas.
[para. 4] Multinational suppliers are under pressure to adapt to the new automotive ecosystem. Increasing demand for local production and efficient supply chains has led companies like Bosch to increase R&D in China. Suppliers like Magna can assist Chinese automakers in going global by leveraging existing capabilities.
[para. 5] The historical structure of the automotive supply chain is being disrupted as software and hardware decouple, enabling car manufacturers to develop their own systems. Bosch and ZF must adapt by offering flexible solutions rather than bundled sales, as seen with Bosch facing challenges from emerging suppliers in areas such as hybrid systems.
[para. 6] Chinese automakers' innovations in plug-in hybrid systems highlight the growing competitiveness of domestic solutions. The declining market share of gasoline vehicles is direct evidence of their success, reinforced by supportive governmental policies and the shift towards new energy vehicles.
[para. 7] Bosch initially misjudged the importance of power batteries when abandoning joint ventures in this area, giving companies like CATL room to grow and eventually lead the global market. Bosch now partners with emerging Chinese companies, recognizing the need to integrate its operations with local advancements.
[para. 8] Chinese automakers’ demand for advanced features has encouraged swift domestic technological development. Suppliers like Konghui Technology have capitalized on this by providing high-quality, locally produced components, outperforming slower-reacting multinational suppliers. The shift to software-defined cars necessitates more flexible and integrated development approaches, challenging traditional suppliers' practices.
[para. 9] China's rapid advancements in intelligent technology, challenging older development models of multinationals, require suppliers to adapt or risk obsolescence. Companies like Aptiv illustrate this by investing in Chinese startups to remain competitive, while others face difficulty adjusting to unique regional requirements for smart systems.
[para. 10] Multinational suppliers are strategizing to reclaim market presence by focusing on their manufacturing expertise and global standards. Companies like Bosch recognize the importance of adapting to innovative production methods in China, leveraging local R&D for global advancements.
[para. 11] As the industry shifts towards in-house development of software, multinational suppliers aim to maintain competitiveness by reinventing their value propositions and partnerships, while the continued globalization of Chinese automotive innovations offers opportunities for mutually beneficial collaborations with international suppliers.
- BOSCH
- BOSCH China is focusing on adapting to the smart electric vehicle era by granting its China branch significant R&D autonomy. It has collaborated with local startups and invested in advanced driving systems, successfully integrating products like high-end driver assistance systems into vehicles. BOSCH aims to maintain efficiency and meet market demands, leveraging China's innovations and speed, and intends to use developments in China as a platform for global markets.
- ZF Friedrichshafen AG
- ZF Friedrichshafen AG, a German company, announced plans to lay off 11,000 to 14,000 employees by 2028. The company reevaluated its powertrain technology business in September and subsequently lowered its 2024 revenue and profit targets. ZF's large-scale layoffs are linked to the weakening of its position as one of the global leaders in automatic transmissions, as the rapid development of smart electric vehicles challenges its traditional business focus.
- Valeo
- According to the article, French company Valeo experienced a 5% decline in global revenue in the third quarter of 2024, with a notable 12% year-on-year decrease in the Chinese market. This decline is attributed to the rapid shift in the automotive industry towards electric and smart vehicles, which has left many traditional suppliers like Valeo struggling to adapt to the new market dynamics.
- Tesla
- The article states that Tesla is an exemplar of vertical integration in the automotive industry, having the capability to both integrate software and design hardware for production. Tesla is highlighted as a key player in the electric and intelligent vehicle revolution, setting industry benchmarks and accelerating new technology implementations in China's domestic auto market.
- MAGNA
- MAGNA is mentioned in the article as one of the leading players in the global automotive parts industry, alongside Bosch and ZF Friedrichshafen AG. It is highlighted in the context of the rapidly growing prominence of companies like CATL in the electric vehicle supply chain. The article notes MAGNA's role in providing full-service offerings including contracted manufacturing and parts supply, which can aid Chinese automakers in overcoming trade tariffs when expanding internationally.
- CATL
- CATL, established over a decade ago, is a global leader in EV battery installations, ranking first for seven consecutive years. Its rapid rise was facilitated by gaining large-scale industry support, improving product upgrades, and securing its global position, just behind Bosch and ZF. In a notable collaboration, CATL agreed to provide technology licensing and operational support for Ford's LFP battery plant in the U.S. through a technology authorization service.
- BYD
- BYD, originally a battery manufacturer, has become a significant player in the automotive industry, producing substantial quantities of components in-house. Their plug-in hybrid systems integrate engines, batteries, and motors, simplifying transmission structures and enhancing powertrain performance. This approach has led to strong competitiveness in hybrid vehicle offerings contributing to the decline of fuel vehicle market share.
- Kong Hui Technology
- Kong Hui Technology is a domestic company that actively developed air suspension systems when foreign suppliers couldn't meet the pace. Their products are of good quality and match car manufacturers' needs, earning them significant market success. They've quickly risen in demand, including securing orders from European automakers, showcasing their competitiveness and rapid response to local car companies' needs.
- Baolong Technology
- Baolong Technology is a domestic company that, along with Honghui Technology, has captured significant attention in the automotive industry by quickly responding to demands for air suspension systems. They provide quality products at competitive speeds, matching the needs of local car manufacturers like Li Auto. Baolong’s success has been bolstered by its ability to effectively meet these demands, making it a popular choice among both domestic and European automakers.
- Li Auto
- Li Auto is working to shorten its new car development cycle to one year, requiring an efficient and flexible supply chain. They urgently needed air suspension systems for their products, which overseas suppliers couldn't deliver promptly. Domestic firms like KONI and Baolong Technology met Li Auto's needs efficiently, and now they report high order volumes, including from European carmakers.
- Aptiv
- Aptiv, headquartered in Ireland and originating from Delphi, focuses on active safety and smart technologies. It has launched six generations of intelligent driving assistance systems globally. Recently, Aptiv invested approximately 570 million yuan in Chinese startup MAXIEYE, becoming its largest shareholder. This investment reflects the significant changes in intelligent driving technologies, emphasizing the growing role of AI and end-to-end architecture, which presents challenges to traditional modular systems.
- Luxshare Precision
- Luxshare Precision is mentioned as a company that has ventured into the automotive component business, capitalizing on its experience in cost control and production within the consumer electronics supply chain. It is actively transitioning into the automotive sector, alongside other electronics companies like Huaqin Technology and TCL, to capture opportunities in the growing market for automotive components, particularly in the realm of smart and electric vehicles.
- Huaqin Technology
- Huaqin Technology, a company originally in the consumer electronics supply chain, has expanded into the automotive components business. They are known for their competitiveness in cost control and are among the companies crossing over into automotive parts amid the increasing integration of electronic components in vehicles.
- AUTOLIV
- AUTOLIV is identified as a Swedish multinational supplier that dominates the mid-to-high-end market for automotive safety components. These components require significant data and experience, areas where Chinese companies have yet to catch up. AUTOLIV specializes in automotive electronic safety, seatbelt, and steering wheel systems, and maintains a strong hold in the safety parts sector due to its rigorous standards and long-standing expertise.
- Infineon
- The article does not specifically mention Infineon. It discusses the challenges and changes faced by traditional automotive suppliers amid the rise of electric and intelligent vehicles, with a focus on companies like Bosch, ZF Friedrichshafen AG, and others. Infineon is mentioned indirectly as an example of a chip supplier that companies like Bosch might partner with due to its ability to provide components more cost-effectively than individual car companies.
- July 2024：
- ZF Friedrichshafen AG announced it plans to cut 11,000 to 14,000 jobs by 2028.
- July 2024：
- Retail volume share of domestic new energy passenger vehicles exceeded 50%, starting a four-month streak.
- September 2024：
- ZF revised down its revenue and profit targets for 2024 after reassessing risks in its powertrain technology business.
- October 2024：
- Chinese local brands' market share surpassed the 70% mark.
- By October 2024：
- Retail volume share of domestic new energy passenger vehicles exceeded 50% for four consecutive months.
- End of October 2024：
- Aptiv announced an investment of approximately 570 million yuan in Chinese smart driving startup MAXIEYE.
- PODCAST
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新