CHONGQING – Chinese OEMs are tightening their belts to acquire the requisite technology to meet the government’s push for electric vehicles. The time for autonomous vehicles is still away by another decade.
The major OEMs are investing heavily into technology by acquisitions or opening R&D centers overseas and hiring huge engineering workforce to meet the government deadline of 3 million EVs by 2025.
To acquire required know-how, the OEMs should adopt collaborative approach to leverage opportunities. “We need to forge partnerships and alliances to acquire technology besides integrate resources effectively,” pointed out Zhu Huarong, president of Chang’an Automobiles Co., Ltd., at the Global Automotive Forum held here on June 7.
The Chongqing-based automaker also emphasizes on improving design and styling. “We need to focus on design and styling and set up centers through alliances and acquisitions overseas in countries like Italy and Japan,” Zhu said.
There are also chances of a major shake-up in the Chinese auto industry and it may lead to consolidation. The market is going to be fiercely competitive as new players are entering the auto sector and a number of them may not survive long enough.
“Currently, there are 46 auto brands in China and only five traditional brands may survive in the next five years as new energy vehicles require lots of investment,” Zhu predicted.
The heavy investment into R&D is evident from the huge work force at some of the sites. For example, Geely boasts 10,000 R&D engineers in Hangzhou, Gothenburg and the UK combined. It has opened four product modeling design centers in Los Angeles, Gothenburg, Barcelona and Shanghai.
The opening of R&D and design centers in multiple locations overseas along with the homeland helps the automaker to understand and align the global trends with Chinese brands. “We have learned a lot from our cooperation with Volvo,” emphasized An Conghui, president and CEO of Geely.
BYD advocated that financial subsidy stay on for automakers. “We need to focus on improving product quality by enhancing core competency to lower the cost of battery and control to compete in the market even if subsidies are withdrawn,” said Lian Yubo, vice president of BYD.
To further sharpen its skills in making battery, control and motor technology, BYD expanded its R&D and hired more than 200 engineers of foreign origins.
Commenting on BYD’s global expansion, Lian added, “Our Hungarian plant started operations and our French and Brazilian plants are under construction, and our plant in the U.S. has received plenty of orders for 2017.”
Automakers strongly believe that traditional development models should be discontinued and new out of box ideas should be adopted. “The people born in the post 80-90s are the new car buyers and technology will drive the auto industry,” feels Cai Bin, assistant to president of SAIC Motor. “We have to develop a new business model that caters to the requirements of NEVs right from production to delivery and service along with integration of finance to the auto industry.”
The industry agreed that the electrification of the car market will be around 20 percent between 2020 and 2025. “Technology will be ready for autonomous cars by 2019-20, though infrastructure may take some more time and in the 2025-2030 phase, the autonomous market would likely to reach 20 percent globally and 10 percent in China respectively,” predicted Simon Yang, president of Delphi China.