Phoenix Technology News, April 17th, Beijing Time. The Financial Times of the UK published an article on Wednesday stating that over the past twenty years, the landscape of car manufacturing in China and Europe has reversed: before, China learned European oil vehicle technology, but now it is China teaching Europe how to manufacture electric vehicles.

Twenty years ago, German engineers often privately ridiculed the new car prototypes developed by their Chinese joint venture partners. At least one design was directly inspired by a German model's advertisement.

"They have no original ideas; they are just imitating," said a software executive at a German automaker.

However, recently, this German executive received a "wish list" for the future car operating system planned by his company. Each function on this list was almost identical to features already launched by Chinese electric vehicle manufacturers.

"The situation has reversed," the executive stated.

From Teacher to Student

The progress made by Chinese automakers has caused unease within the EU. Last year, Europe imposed a maximum tariff of 45% on Chinese electric vehicles. However, the EU and its regional automotive industry are also adopting a new strategy: learning from China's technological expertise.

An increasing number of European companies are reaching agreements with Chinese competitors to prevent falling behind in core areas such as software, batteries, and autonomous driving systems, which will drive the future development of the automotive industry. Companies like Volkswagen, Mercedes-Benz, Stellantis, and BMW have reached agreements with Chinese automakers to acquire relevant technologies.

The new policy framework of the EU aims to give these companies greater negotiation leverage. In last month's "action plan" for the automotive industry, the European Commission required Chinese companies entering the EU market to establish joint ventures with European companies or license some of their technologies.

If these efforts succeed, it will be a major turning point in economic history over the past few decades. For the past forty years, China has been trying to learn European automotive technology. Now, Europe is also attempting to adopt similar methods to catch up with China's leading position in electric vehicle technology innovation.

"This is a shift where Europe is welcoming foreign investment in a field that has long been a source of pride for European industrial development," Elisabetta Cornago, senior researcher at the UK think tank Center for European Reform, stated. "It also indicates that there is a gap between European indigenous technology and existing foreign technology."

"We overestimated ourselves, but we also certainly underestimated others," Robert Falck, founder and CEO of Swedish startup Einride, stated. The company became the world's first to deploy fully autonomous trucks on public roads in 2019. "What we need to do is face reality," he added.

Raymond Tsang, an auto-tech expert at Bain & Company based in Shanghai, noted that since 2020, foreign automakers' market share in China has shrunk by a third, leaving them "no choice" but to cooperate with Chinese tech companies to survive.

Germans Feel It Most

No country embodies this global shift in the automotive order better than Germany.

As the largest economy in Europe, Germany's wealth is largely built on exports to China, which achieved rapid growth after opening its economy in the 1980s.

German automotive giants Volkswagen, BMW, and Mercedes-Benz were pioneers in this field, operating in the Chinese market for decades and reaping substantial revenue and profits.

Volkswagen established a joint venture with SAIC Group in 1984 to produce Santana sedans for the Chinese market. The company was the first to partner with Chinese counterparts, reaping rich rewards. Volkswagen remained the best-selling automotive brand in China until last year when it was surpassed by BYD, which only began independent car production in 2005.

For decades, German executives would recount stories upon returning from the biennial Shanghai Auto Show about clumsy attempts by Chinese domestic brands to mimic their best-selling models.

However, this mockery came to an abrupt end in 2023, as people clearly realized that Chinese electric vehicle manufacturers had far outpaced them in software and battery technology.

In July of the same year, Volkswagen announced an investment of $700 million in XPeng Motors, gaining a 5% stake and an "observer" seat on the board. The following year, the two companies announced plans to jointly develop "intelligent connected vehicles" for the Chinese market.

Hundreds of Volkswagen engineers have been collaborating with XPeng in Guangzhou and Hefei, personally learning the technical expertise in developing intelligent driving architectures.

Volkswagen set the precedent for foreign automakers cooperating with Chinese companies, with other collaborations including Daimler's partnership with Hesai Technology, Stellantis working with Zero Motorcycles, Tencent partnering with Toyota, and BMW collaborating with Huawei.

Psychologically Difficult to Accept

Although European automakers have established joint ventures with Chinese companies and the advancement of Chinese technology is evident, a European executive based in China stated that the outdated notion of "Western technological superiority" still exists in certain groups.

This executive said, "Many people find it hard to adapt to the new reality where China now leads in innovation," which may be due to "some arrogance or naivety."

Christoph Weber, head of AutoForm's China operations, a Swiss engineering software group, stated, "Western brands have tried to develop competitive software but have generally failed. But they haven't emotionally accepted China's rise yet."

"Some people are still avoiding reality, ignoring the fact that electric vehicle technology is absolutely superior and that the era of software-defined cars is coming," Weber said.

John Lawler, vice chairman of Ford and former CFO, stated that seeking technology transfer from Chinese companies hoping to establish battery joint ventures in Europe is a practical approach.

"I think they (Chinese automakers) paid more attention to electrification earlier than the rest of the world because they don't dominate the internal combustion engine sector," Lawler said. "So, the current situation is that they are leaders in electric mobility and battery technology."

(Author/Kris Yu)

Source: Phoenix Technology

Original Article: https://www.toutiao.com/article/7494127492580590114/

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