Challenging with localized strategies
Global automotive companies are re-entering the Chinese market with electric vehicles. Not only German or American companies that already have a high sales share in China, but also South Korean and Japanese automakers that once "stepped away" from China are beginning to focus on the market again. Recently, Japanese automakers Toyota and Nissan announced plans to invest several trillion Korean won to build electric vehicle factories. Hyundai Motor will increase its R&D center in China and launch its first China-specific electric vehicle.
As the Chinese market has become a stage dominated by domestic electric vehicle companies like BYD (Build Your Dreams), foreign major players have sold their factories and scaled down operations after experiencing a sharp drop in sales. However, now these foreign companies are rearming themselves with a new strategy focusing on electric vehicles rather than internal combustion engine vehicles, knocking on the door of the Chinese market again. There is analysis suggesting that while there is still an "electric vehicle chasm" phenomenon globally, the market position of Chinese electric vehicles, which have grown independently, is becoming increasingly prominent.
According to market research firm SNE Research, last year's Chinese electric vehicle sales (11.62 million units) surged by 40% compared to 2023, accounting for about two-thirds of global electric vehicle sales (17.63 million units). The global automotive industry clearly predicts that although it may take time under environmental protection trends, internal combustion engine vehicles will eventually be replaced by electric vehicles. Therefore, losing a foothold in the world's largest electric vehicle market, China, could lead to a sense of crisis in future automotive competition. Especially affected by the U.S. tariff war, not only the U.S., but also alternative markets such as ASEAN are shrinking. Hence, the Chinese market, with over 10 million electric vehicle sales, cannot be overlooked.
Foreign companies' efforts to conquer China recently have not been easy. Not only the top-ranked electric vehicle company BYD, but also Huawei, with its price competitiveness and software technology capabilities, dominates the domestic market, leaving so-called strong teams of internal combustion engine vehicles overseas at a loss. According to statistics from the China Passenger Car Association (CPCA), as of last June, the market share of enterprises outside China (Germany, Japan, South Korea, etc.) in the Chinese market was 43%, which has been declining since reaching its highest record of 64.3% in 2020. Last year, Hyundai Motor closed its Chongqing plant, and Nissan closed its Changzhou plant for this reason.
The core keyword for Japanese and South Korean companies re-challenging China is "localization." Toyota plans to build a dedicated electric vehicle factory for its luxury brand Lexus in Shanghai in June this year, investing approximately $2 billion (about 2.8 trillion Korean won), with a target production start in 2027. Additionally, starting with the China-specific electric sedan "BZ-7" unveiled last month in China, Toyota began adopting Huawei's software system.
New models for China continue to emerge. As China becomes the world's largest electric vehicle market, consumer expectations are rising. Nissan announced last month at the Shanghai Auto Show that it would invest $1.4 billion (about 2 trillion Korean won) in China by next year and develop up to 10 new models by 2027. The first electric pickup truck "Frontier PRO" will be launched in China this year instead of in the U.S. Honda also started production of China-specific electric vehicle brands under its "Yan" series at two newly established electric vehicle dedicated factories (Guangzhou and Wuhan) last December.
Hyundai Motor will launch its first electric vehicle specifically developed for the Chinese market, "ELEXIO," in the second half of this year. The daytime running lights consist of eight large gem-shaped lamps. In China, this design contains the lucky number (8). Moreover, Hyundai Motor decided to introduce six additional new energy vehicles (electric vehicles, hydrogen fuel vehicles, plug-in hybrid vehicles) before 2027. Hyundai Motor also established a "Forward Digital R&D Center" in Shanghai last December to study autonomous driving and other technologies.
Expectations for continuous expansion into the largest electric vehicle market - China
Due to geopolitical factors, automobile companies are expected to continuously expand into China. Regarding one of the world's largest automotive markets, the U.S., due to the tariff bomb on imported cars, rising car prices, and the possibility of market shrinkage. Europe, another huge market, has been continuously affected by economic recession after the Russia-Ukraine war, making the Chinese market relatively more important for European automotive companies. Volkswagen Group plans to launch more than 20 electric vehicles in China from 2026 onward, including new models equipped with autonomous driving functions.
ASEAN, the Middle East, and other countries once considered substitutes for the Chinese market are also growing slower than expected. HMG Management Research Institute revealed that last year, the auto sales of five ASEAN countries (Indonesia, Thailand, Malaysia, Philippines, Vietnam) decreased by 6.3% year-over-year. The economic growth rate in the Middle East last year (0.3%) remained flat, dropping significantly compared to the previous year (5.5%).
In contrast, Chinese companies' entry into these markets has also brought pressure to surpass South Korean, Japanese, and European companies. Recently, Chinese companies have captured more than half of the electric vehicle market share in Southeast Asia, catching up with Japanese automakers who once dominated the region; in Brazil, the largest market in South America, Chinese companies secured the top spot in electric vehicle sales last year with a market share of around 64%.
Source: Chosun Ilbo
Original article: https://www.toutiao.com/article/1831983717394432/
Disclaimer: The article solely represents the author's personal views.