Caixin Weekly | New Energy Products Absorb Chinese Power as Multinational Automakers Mount a Counteroffensive in China (AI Translation)

财新周刊｜新能源产品吸收“中国能量” 跨国车企在华反攻

Multinational automakers are striving to regain competitiveness in China’s rapidly evolving automotive market, which has transitioned aggressively toward electrification. Over recent months, joint ventures such as SAIC-GM (Buick GL8) and Dongfeng Nissan (electric N7) have reported swift order growth for new models, each receiving over 10,000 orders soon after launch. Toyota has also gained market attention with its GAC Toyota bZ3X electric SUV, a vehicle primarily developed by Chinese engineers, with key components sourced locally. This high degree of localization is now widely seen among multinational new energy vehicle launches in China [para. 1].

These changes reflect a response by global automakers to waning market share, as electrification disrupts the industry. Data from Frost & Sullivan shows that, as of 2024, new energy vehicles (NEVs) constituted 48.9% of all new passenger car sales in China, but among the top 20 best-selling models, 18 were domestic. Multinational efforts to import electric models designed abroad (such as Volkswagen’s ID series) have met poor results—Volkswagen expects to sell only 200,000 NEVs in China in 2024, less than 10% of its gasoline vehicle sales. Similarly, Toyota’s global EV bZ4X met resistance, leading to price cuts. Multinationals now acknowledge the need for deep local R&D and partnerships to compete effectively [para. 1][para. 2].

Market experts and industry executives see China as the global center of automotive technology innovation, warning that international brands risking resistance to local trends face marginalization. Even domestic brands are threatened if unable to keep pace with technological transformation. According to consulting firm iMotion, the auto industry is undergoing fundamental change, and no company can afford complacency. Regulators have responded to concerns about intelligent EV safety, an area where multinationals like Toyota still have strengths [para. 3][para. 4].

Multinationals are restructuring to lower their profile and boost local decision-making. Since 2025, Toyota has promoted Chinese nationals to top roles at its China division, created a “China Chief Engineer System,” and assigned local engineers to lead R&D for upcoming EVs. This has resulted in technological advances suited to China’s unique consumer demands. Toyota has started producing Lexus EVs in Shanghai, investing 5.5 billion yuan in a new facility. Volkswagen has invested $700 million in Xpeng Motors, and partnered with Chinese companies to accelerate R&D and develop new platforms. Other multinationals, such as Mazda and Audi, are adopting Chinese EV platforms or local suppliers to keep pace [para. 4][para. 5].

With China accounting for 30% of global auto sales and 65.9% of worldwide NEV sales in 2024, failure to establish a strong position in China jeopardizes global strategy for traditional automakers. Chinese brands like BYD and Geely are breaking into the global top ten, while those late to adapt—like Stellantis, Suzuki, and Renault—have suffered or exited China. New global tariffs, especially from the U.S., heighten risks for manufacturers reliant on global supply chains, underscoring the strategic necessity of regional localization [para. 6].

Domestic brands dominate market share, rising from 38.4% in 2020 to 68.1% by Q1 2025, while German, Japanese, American, and Korean brands have dropped sharply. As NEV technologies become more homogenous, brand reputation and safety are likely to grow in importance. Stricter safety regulations, such as new battery standards effective July 2026, play to multinationals’ traditional strengths and may help shift consumer perceptions [para. 7].

Despite intense competition, China’s domestic automakers face shrinking profits and ongoing restructuring amid industry consolidation. Multinational automakers have an opportunity to stabilize or rebound if they act swiftly. Observers predict that by 2027, market competition may become more rational, providing a window for multinational brands to recover their standing in China [para. 8][para. 9].