China’s auto industry is experiencing a new phase of high-quality development, particularly in the field of new energy vehicles where it has established a competitive edge, said officials at the 2023 China Auto Forum in Shanghai. China’s vehicle production and sales have ranked first for 14 years in a row. The NEV sector has maintained top position in global production and sales for eight consecutive years. And the market still holds significant growth potential. It is projected that peak domestic auto demand in China will reach around 40 million vehicles, according to Fu Bingfeng, Executive Vice President and Secretary General of the China Association of Automobile Manufacturers (CAAM), which hosted the forum. Passenger vehicles will be the main driver of growth and market expansion will shift toward third- and fourth-tier cities as well as rural markets, Fu said.
Key measures will be taken to strengthen the construction of an independent innovation system and establish a self-controlled industry chain to foster a modern industrial system, Fu said at the forum. Chinese brands have a historic opportunity to overtake competitors in the global market, said Wang Jun, President of Changan Automobile, at the forum. Chinese brands now hold the majority of the market share. In the first quarter, domestic passenger car brands captured a market share of 52.2% and the share is consistently increasing. In the NEV sector, Chinese brands achieved a higher market share of 82.3%. In 2022, China’s market share of NEVs accounted for more than 65% of the global total, maintaining its position as the world’s leading NEV market for eight consecutive years.
China’s 20 millionth NEV rolled off the production line at the GAC Aion’s factory on July 3. It took 15 years to reach the first 10 million, while the second 10 million took only one year and five months. “Sustained technological innovation is crucial to maintain our early-mover advantage in the NEV industry,” Feng Xingya, President of GAC Group, said he said. GAC has invested approximately 6% of its revenue annually, totaling nearly CNY42 billion, in independent research and development. In 2022, the group filed 3,255 new patent applications and invested an additional CNY6.5 billion in R&D.
Yu Kai, Founder and CEO of Chinese chipmaker Horizon Robotics, said that Chinese domestic brands have upgraded with intelligent connected features. An example is that 82% of Chinese-branded vehicles priced above CNY300,000 are equipped with Level 2+ driving-assist functions. Meanwhile, the rate is significantly lower in the models of joint ventures. This shift positions China as a key market for global chip manufacturers, such as Nvidia, Qualcomm, Mobileye and Horizon Robotics, who prioritize launching advanced smart chips in domestic vehicles.
The fast-growing market also poses challenges for international carmakers. Volkswagen said that the country has become a “fitness center” for Volkswagen, which asks it to work harder. Based on the “In China, for China” strategy, Volkswagen has cooperated with local partners in information and entertainment systems, autonomous driving, chip design and battery manufacturing. Ralf Brandstaetter, Chairman and CEO of Volkswagen Group China, said that the company is accelerating to reach “China speed” and has decreased the launch time for products and technologies through its partnerships by 30%.
At the forum, 16 major auto companies – including State-owned FAW, Dongfeng, SAIC and EV startups Nio, Xpeng, Li Auto, as well as Tesla – jointly signed a letter to maintain fair competition. The commitments include adhering to market regulations, avoiding disruptive pricing practices, promoting honest marketing, and prioritizing quality, the China Daily reports.
