Audi bows its head? Or "buy technology" from Chinese car companies! Brand | China | Technology
Audi, one of the "hegemons" of the era of gasoline vehicles, may bow down to Chinese car companies in the era of electric vehicles.
According to German media reports, in response to the increasingly fierce competition for electric vehicles in China, Audi is considering purchasing authorization for an electric platform directly from local electric vehicle companies to shorten the development time of its models. Currently, relevant negotiations are underway.
Regarding this, Audi China has informed the media that it is well known that the Chinese automotive market is undergoing the largest period of change in history. Audi will work together with all parties to formulate strategic policies and create a successful future.
From the previous "exchanging market for technology" to today's "exchanging technology for market", Chinese car companies are making a leap forward. "Thirty years in the east and thirty years in the west. The Chinese passenger car market started from scratch. In the last century, Audi entered China and established a joint venture with FAW, and we exchanged technology for the market. Now, China is in a leading position in the electric vehicle market in terms of industry chain technology, vehicle manufacturing, market reputation, and price competitiveness, and has gained international competitiveness." Wang Peng, deputy researcher at the Beijing Academy of Social Sciences, told reporters.
In the era of electric vehicles, Audi's desolation
As a member of BBA, Audi's influence in the era of gasoline powered cars is self-evident. But in the era of electric vehicles, this century old German car brand is facing a crisis of declining influence.
According to data disclosed by Audi, Audi's sales in China from January to March 2023 were 136400 vehicles, a year-on-year decrease of 16%. Moreover, this decline is sustained, with Audi's sales in China reaching 643000 units in 2022, a year-on-year decrease of 8.4%.
The significant decline in sales has also caused Audi to fall behind in its largest market in China. In 2022, BMW and Mercedes Benz sold 792000 and 752000 vehicles respectively in China, which has already opened up a gap of 100000 vehicles compared to Audi. In the first quarter of 2023, Mercedes Benz and BMW both sold over 190000 vehicles in China, leaving Audi behind.
The "lagging behind" in sales in China is also affected by the failure of Audi's new energy transformation. At present, the penetration rate of new energy vehicles in the Chinese market continues to rise. According to statistics from the China Association of Automobile Manufacturers, the sales of new energy vehicles in China reached 3.747 million units in the first half of 2023, a year-on-year increase of 44.1%, and the market share of new energy vehicles has reached 28.3%.
In the field of new energy, although Audi continues to increase its sales, its electric vehicle sales growth rate lags behind Mercedes Benz and BMW. In 2022, Audi's global sales of pure electric vehicles were 118200 units, a year-on-year increase of only 44%. During the same period, Mercedes Benz's sales of pure electric vehicles were 149200 units, an increase of nearly 70%, while BMW's sales of electric vehicles were 215800 units, an increase of more than double. Both in terms of sales volume and growth rate, Audi's electric vehicle transformation progress is not as fast as Mercedes Benz and BMW.
Therefore, Volkswagen CEO Aobo Mu also expressed a feeling of "Audi falling behind". Aobo Mu believes that the Audi brand has enormous potential, but it has not been able to translate into specific products in recent years. Moreover, Audi's lineup of models is facing an extremely awkward situation: not only falling behind its competitors, but also falling behind its own capabilities. He cited the performance of the Audi brand in the Chinese market as an example: "Audi is currently highly dependent on the Chinese market, but in the electric vehicle field, Audi does not have competitiveness in the Chinese market."
"In fact, Audi is not the first foreign leading car company to admit that its technology is not as good as that of China. Toyota, as a former global hegemon, has recently admitted that its technology in pure electric vehicle research and development is inferior to that of China, and will establish a new research and development system in China to catch up with China's platform advantages in the field of new energy pure electric vehicle research and development." Independent international strategy researcher Chen Jia said in an interview with reporters.
Shortly after the CEO of Volkswagen expressed his emotions, Audi experienced a "change of style controversy". On June 30th, Audi Group announced that the CEO of Audi Group, Marcus Dussman, will be dismissed, and his successor will be the current Volkswagen Product Strategy Director, Gnot Dolner. The appointment will take effect on September 1st.
"For new energy vehicles, if Audi wants to open up the Chinese market or be competitive internationally, it needs to cooperate with advantageous manufacturers in order to gain a foothold in the fiercely competitive new energy vehicle market. This is also the rationality that century old enterprises should have," said Wang Peng.
Accelerate electrification transformation, with platforms becoming the focus
In order to accelerate its electrification transformation, Audi is also willing to invest a lot of money. At the 2023 Audi Group Annual News Conference, Audi announced a major investment plan: from 2023 to 2027, two-thirds of the company's expenses will be invested in future electrification and digitization fields, totaling approximately 28 billion euros. Dusman stated that by 2027, Audi's models in all segmented markets will be electric.
To promote the transformation towards electrification, Audi has four cards in its hands, namely the four electrification platforms of Volkswagen Group, namely the MLB evo platform, J1 high-performance electric platform, MEB platform, and PPE platform.
Simply put, an electrification platform is an important technological platform for car companies to produce electric vehicles on a large scale. It can effectively improve the efficiency of automotive research and development and manufacturing, allowing car companies to create different levels of vehicle models based on the platform in a short period of time.
Looking at the "four cards" in Audi's hand. The MLB platform is more inclined towards mid to large vehicles, with products including Audi A4L, Audi Q5L, etc; The J1 high-performance electric platform is developed by the Porsche brand and can manufacture high-performance vehicles such as the Porsche Taycan; The MEB platform belongs to the Volkswagen Group and is used to create Volkswagen's ID. pure electric series models. Audi will use this platform to create medium and small pure electric vehicles; The PPE platform is designed and developed by Audi and Porsche to create mid to large-sized and large sedans and SUVs, positioned as luxury cars.
Despite having many "cards" in their hands, they have not yet helped Audi achieve good results, which may have become the reason for rumors that Audi is considering obtaining authorization for Chinese electric platforms.
At present, the electric platforms of Chinese car companies are "sufficient to play". In September 2020, Geely released the SEA vast pure electric architecture, which achieved full size coverage and had the characteristics of "hardware, software, and broader integration capabilities". The models built on this platform include the Jikruzi brand, etc. Currently, Jikruzi 009 and Jikruzi X have been launched successively.
In September 2021, the BYD e-platform iterated to version 3.0, providing design and manufacturing solutions for pure electric vehicles from the perspective of vehicle construction, achieving standardization of pure electric vehicle manufacturing. The platform integrates BYD's core three electric technology, and the blade battery integrates the battery cells with the vehicle chassis, improving usage space and enhancing vehicle safety.
In addition, Changan Automobile has launched three pure electric platforms: Ark architecture, EPA platform, and CHN platform, which are respectively applied to Changan, Shenlan, and Avita brands; The NT2.0 platform used by NIO is widely used in models such as ET7/ES7... Overall, Chinese car companies have achieved a diversity of electric platforms.
Chen Jia believes that, after more than ten years of macro industrial policy support and the steady development of China's auto private brands, China's auto industry chain in the new era is accelerating its shift into a critical period of breaking the trend. It is not only gradually becoming a strategic emerging pillar industry in the process of Chinese path to modernization, but also has comparative advantages in the global industry chain and supply chain.
From the perspective of global industrial division of labor and cooperation, leading automotive brands in Europe and Japan purchase the most advanced pure electric vehicle manufacturing technology from China, which not only greatly benefits the green transformation of the global automotive industry and accelerates the technological progress of Europe and Japan in the new energy vehicle industry chain, but also fundamentally breaks through the constraints and bottlenecks in improving their local green economy and energy conservation and environmental protection. Currently, regions such as Europe, America, and Japan have high inflation levels, high labor prices, and high cost of industrial chain transformation. They "wake up early, catch up late" in the early stages, and the entire automotive industry chain is wrong for the new energy science and technology tree. There are serious structural transformation bottlenecks in the supply side of their automotive industry. At this moment, importing relevant technologies from China is to shorten their technology learning curve, reduce technology transformation costs. "The best way to achieve cost," said Chen Jia.
Chinese cars entering Europe with strong market acceptance ability
Why has the electric platform of Chinese car companies become a coveted item in the eyes of some European car companies?
Chen Jia told reporters that Europe, the United States, and Japan have adopted a highly protective stance towards their domestic automotive industry for many years. The brand power of leading brands such as "BBA" is deeply rooted in the minds of European consumers, and it is difficult for other external automotive brands, including Japanese and American automotive leaders, to start from scratch in Europe.
"However, due to the systematic comparative advantage of Chinese pure electric platform brands over European domestic brands in terms of technological research and development, and the acceleration of China's new forces in car manufacturing, Chinese pure electric vehicle brands have begun to establish a foothold in the European market. European consumers are gradually accepting and recognizing the technological and brand power of Chinese pure electric platforms," said Chen Jia.
At present, Europe is becoming the main "destination" for China's automobile exports. According to KPMG's "China's New Energy Vehicle Dream in Europe" report, China's new energy vehicle exports to Europe account for nearly half of all new energy vehicle exports. In 2021, Europe became the largest region for China's new energy vehicle exports, and in 2022, China's new energy vehicle exports to Europe continued to lead other regions.
The recent production and sales report released by SAIC Group, China's leading exporter of automobiles, shows that in the first half of 2023, MG brand sold 115000 vehicles in Europe, a year-on-year increase of 143%, with new energy vehicles accounting for more than 50%. At present, MG brand products and services have covered 28 countries in Europe, with over 830 service outlets. The monthly delivery volume in Europe has reached the level of 20000 vehicles for four consecutive months.
In addition to SAIC Group, car companies such as BYD and NIO are also accelerating their entry into the European market. Canalys predicts that by 2025, the penetration rate of the European new energy vehicle market will exceed 40%, with the penetration rate of Chinese automotive products expected to increase to 16.5% in the European market.
Why are Chinese new energy vehicles popular in Europe? Chen Jia stated that on the one hand, European domestic car brands are facing hard regulatory constraints from the European Union on gasoline vehicles. On the other hand, European consumers have diverse choices from multiple product lines and major segmented markets of Chinese brands.
The KPMG report shows that the scale advantage of China's new energy vehicle market enables companies to provide more vehicle models, covering various market segments from low-end to mid to high end, and can meet the different needs of European consumers. In 2022, there are 136 new energy vehicle models available for consumers to choose from in China, including 110 pure electric vehicle models, ranking first in the world with a complete product matrix.
"Faced with strong pressure from technology and the demand side, European leading brands, who used to be the 'teachers' of Chinese automotive technology, have to lower their heads and instead learn new energy vehicle technology from' students'. This kind of mutual learning and teaching is part of global technology transfer, and two-way flow is the correct methodology for dealing with technology transfer issues between major countries," said Chen Jia.
From technology to market, the growth of Chinese car companies
The news that Audi is considering purchasing authorization for Chinese electric platforms also reflects that the Chinese automotive industry is entering a new era of "technology for market", which is different from the previous era of "market for technology".
In 2017, Geely invested in Proton, creating a full industry chain output model of "product, technology, talent, and management", which enabled Proton to maintain its second market share in Malaysia.
In December 2022, Great Wall Motors held the 2022 Overseas Dealer Conference in Bangkok, Thailand, and announced the "ONE GWM" global brand action plan. With the Chinese headquarters as the core, it will layout overseas factories, export technology, and establish a local supply chain system based on the demand for car use scenarios in various regional markets worldwide and local industrial advantages.
It can be seen that many Chinese car companies have conducted "technology exports" overseas, exchanging their technological advantages for market share in overseas regions. Wang Peng believes that Audi's "bow down" reflects the improvement of China's vehicle manufacturing technology. The achievement of this leap is due to the accumulation of many years of experience in assembly, processing, and after-sales service accumulated by Chinese car companies, including the experience in cooperation with foreign car companies. At the same time, it is also due to the overall improvement of China's manufacturing industry. With the ability of the industrial chain and supply chain, products can achieve "high-quality and cost-effective".
During an interview with reporters, co-founder You Xi also stated, "From the past 'exchanging the market for technology' to now 'exchanging technology for the market', Chinese car companies have achieved a win-win situation of technological progress and market expansion. This is the result of Chinese car companies increasing their research and development investment and innovation capabilities for a long time. The Chinese government's support policies for the new energy vehicle industry have played a key role in promoting Chinese car companies to strengthen in the technology field, continuously improve product quality and competitiveness."
Yu Xi said that Audi's purchase of electric vehicle platform authorization from Chinese car companies can be seen as a strategy for Audi to seek technological cooperation and make up for its own shortcomings in an urgent competitive environment. This also reflects that Chinese car companies have gradually gained international recognition and respect for their technological development in the field of new energy. For Audi, cooperating with Chinese car companies to acquire suitable electric platforms through mergers and acquisitions is a smart choice to bow down.
So, how to maintain the technological advantages of Chinese car companies in the new energy era? Chen Jia said: "to achieve this, light output technology innovation is not enough, light possession of the European and American markets is also insufficient. What is more important is to export the industrial chain and supply chain to Europe and the United States, and then export the technological innovation standards of the automobile industry -- this is not only the foundation of the automobile powers of Europe, the United States and Japan for many years, but also the strategic winner and loser of China's automobile industry to consolidate the foundation of comparative advantage in the future global automobile industry."
Wang Peng believes that Chinese car companies need to further increase their research and development investment to tackle high-end technology challenges, such as in the fields of automotive chips and operating systems. At the same time, it is necessary to enhance the control ability of the industrial chain, improve the supply, digestion, and service capabilities of the industrial chain. Finally, it is necessary to cultivate relevant talents, including both traditional mechanical talents and talents in new energy and new technologies, as well as marketing talents who understand both the market and technology.
"China's own new energy vehicle brands must quickly break free from the dilemma of price wars, truly tilt resources towards the standardization of new technologies in the new energy vehicle industry, solidify the 'dual comparative advantages' of the market and technology formed over the years into technical standards, and thus achieve a long-term mechanism for sustainable development," said Chen Jia.
