The world has never pressured legacy carmakers as much as it does now, with the Chinese EV manufacturers able to transform the entire automotive industry by radically different operating models, shrinking production times by a half, reducing manufacturing expenses by a third, and delivering unprecedented technological innovation that has given traditional market leaders in Europe and North America buyer obsolescence.
Chinese car manufacturers receive great market advantages
International Council on Clean Transportation (ICCT) today announced its third annual Global Automaker Rating, indicating that the China-based automakers are establishing substantial competitiveness in the zero-emission vehicle (ZEV) market. The result is representative of China as a leader in the global EV transition, where the nation currently sells more than 11 million EVs each year.
Chinese producers have taken advantage of their huge domestic base to create economies of scale and technological development. Today, they are generating profits in broader international markets. Automakers with operations in China took the 5 leading positions in the number of ZEV classes covered and 5 of 6 leading positions in EV sales share.
In 2024, BYD out-sold Tesla in battery electric vehicle (BEV) sales worldwide, and its BEV sales increased 25 percent, and its combined BEV and plug-in hybrid electric vehicle (PHEV) sales increased 47 percent compared to 2023. The two firms are categorized in the Leaders group of the rating.
New operating model changes the industry standards
China EV Pulse says the Chinese NEV manufacturers are becoming the most vibrant players in an industry that is experiencing significant headwinds. In contrast to Western car manufacturers, which keep struggling with poor expansion and the lack of substantial returns on EV investments, Chinese automakers gain momentum at an unprecedented pace and agility.
Under the new operating model of China, automobile manufacturers are now able to introduce cars within half the time, reduce investment requirements by 40-50 percent, and reduce production costs by 30 percent relative to the old process. Not only is that good in terms of margins, but it is a game-changer in a world where AI, intelligent factories, and agile decision-making become the new standard.
The declining capacity in Europe leads to growth in China
By 2030, Chinese OEMs will increase their market share in Europe to 10 percent through local production, and the established European automakers will have to deal with underused plants and shrinking capacity. AlixPartners anticipates the Chinese brands to contribute to 800,000 units of production capacity in Europe by the year 2030. Simultaneously, European car producers can be pushed to reduce their capacity by 400,000 units. The Chinese lead is not only cost-cutting – the country has now surpassed in terms of vehicle technologies, including ADAS (Advanced Driver Assistance Systems).
The world ADAS market will reach 50 billion USD in 2030, and China may control 45 percent of the market. Chinese NEV brands are also becoming competitive through non-price incentives such as free insurance, cash bonuses, and 0-percent financing despite continued price wars. Meanwhile, an enormous consolidation is taking place within the industry.
Technology advances drive competitive advantage
Our evaluation found extensive enhancement in BEV technology performance throughout the industry, said Zifei Yang, Global Passenger Vehicle Lead at ICCT. The improvements in the energy consumption, charging speed, and driving range of the BEVs sold to the market were evidenced by the vast majority of automakers.
Chinese electric vehicle dominance is not only a victory of market share but is also an indication of a complete change in the automotive manufacturing and innovation. The old automakers are in desperate need to implement the agile operating models of China, or they will be shunned to the periphery of the highly dynamic industry where speed, efficiency, and technological innovation are the key factors of survival.