Foreign automakers are increasingly teaming up with Chinese tech companies to introduce cutting-edge technologies like artificial intelligence (AI) in vehicles, targeting the preferences of tech-savvy customers in China, the world’s largest auto market. Toyota, the world’s largest automaker by sales, announced a partnership with Chinese information technology company Tencent to develop advanced intelligent driving solutions at the 2024 Auto China, which concluded on May 4. Tencent, owner of China’s largest messaging app, WeChat, will provide cutting-edge technologies like AI and cloud computing for Toyota’s cars. They are to connect users’ lifestyles with Toyota’s mobility services and create a diverse mobile transportation ecosystem. Similarly, Japanese automaker Nissan signed a memorandum of understanding (MOU) with Chinese tech company Baidu to collaborate on AI and smart car technologies. This includes joint development and research, and integrating Baidu’s AI solutions into Nissan's vehicles in China. Nissan CEO Makoto Uchida said the company needs to meet the needs of Chinese customers at the same speed at which the market is changing. The collaboration aims to offer smart systems and AI-based mobility services locally and globally. “If we cannot do this, I think it is very difficult to keep our business in China,” Uchida said.
The deals highlight the fact that multinationals are realizing that in order to keep pace with Chinese automakers, who are prioritizing electric vehicles and advanced tech, they need to incorporate similar tech into their models, according to industry experts.
Germany's Volkswagen has done so much earlier, including setting up joint ventures with China’s AI chip provider Horizon Robotics and software group ThunderSoft, as well as investing in China’s EV startup Xpeng to codevelop high-end EVs for the local market. “Four years ago, I thought that Chinese car companies just followed the global manufacturers, but right now it seems like everything has changed,” said Xie Tiandi, Spokesperson for DJI Automotive, a company spun off from the world’s biggest drone maker which is now working with Volkswagen on assisted driving technologies. Industry experts attribute this to China’s vast consumer market and diverse driving conditions, which are conducive to the development of new energy vehicle technologies, as well as the higher acceptance of intelligent technologies among Chinese consumers.
More than 40% of components in intelligent NEVs are not found in traditional fuel-powered cars, necessitating innovative supply chains, which have been established in China, industry experts said. As a result, the market landscape is shifting as Chinese brands gain ground over foreign counterparts. According to the China Passenger Car Association (CPCA), China’s passenger car market saw retail sales reach 1.69 million units, up 6% year-on-year. Sales of domestic brands surged by 19% to 930,000 units, while those of mainstream joint venture brands dropped by 8% to 500,000 units.
Foreign brands’ market share continued to decline in March: German brands held a market share of 20.4%, down 1.5 percentage points year-on-year; Japanese brands accounted for 13.8%, a decrease of 2.2 percentage points; while U.S. brands held 8.2%, down 1.8 percentage points. Their lost market share was captured by Chinese brands, increasing their share by 6 percentage points year-on-year to 54.8% in March, the China Daily reports.
