According to a recent report from the Financial timesa quarter of electric vehicles sold in the EU this year will be made in China. In addition, BYD, the largest EV manufacturer in China, exported 19 percent of its production abroad in February. the highest percentage ever.
Despite Britain, the Biden administration in the US and the French government all claiming they will try to do so block Chinese EVs Through tax subsidies, or going so far as to impose an increase in import tariffs, the impending rise of cheaper electric and hybrid vehicles from China shows no signs of abating.
In addition to calling on governments and lawmakers to intervene, some of the world’s most recognized automakers have also initiated their own reactionary measures to stay competitive. Whether it’s teaming up with their biggest rivals or creating startup-style divisions to figure out a way to produce more affordable mass-market electric vehicles, brands like Ford, Nissan, Honda and more are fighting back .
Here’s how some of today’s auto giants plan to stay competitive in this new era of electrification.
Nissan and Honda
The two Japanese automakers have been fierce rivals for decades, battling for sales both domestically and around the world. But they have also been relatively slow to adopt and innovate in fully electric vehicles, especially compared to their Chinese counterparts.
With brands like BYD aggressively entering the Japanese market, Nissan and Honda have put their existing rivalry behind them and signed a Memorandum of Understanding in which the giants will collaborate on the development of EV technology, including software and components.
Nissan CEO Makoto Uchida said at the announcement: “Emerging players are very aggressive and are entering at incredible speed. We cannot win the competition as long as we stick to conventional wisdom and a traditional approach.”
Although Nissan has quickly proven itself in the mass market with its Leaf, the product is now aging and only the Ariya, which is expensive compared to Nissan combustion engine models, has been launched in most Western markets as a viable, fully electric alternative.
Furthermore, Japanese automakers, like so many others, are finding it difficult to produce smaller electric vehicles at the kind of price that BYD can offer. For example, the Seagull Honor Edition costs 69,800 yuan in China, which works out to around $9,700 / £7,600 / AU$14,700. Even with potential trade tariffs, it will be hard to beat the small EV on price if it goes on sale elsewhere.
In Japan, the BYD Dolphin hatchback is already on sale, priced at just 3.6 million yen (about £18,900 / $24,000 / AU$38,000), cheaper than Nissan’s Leaf and Honda’s e:Ny1 SUV.
The major Japanese players, including Toyota, have been pushing hybrids, rather than focusing solely on improving battery technology and reducing production costs, as BYD, Nio and Li Auto (three of China’s largest automakers) have done over the past decade have done.
The Nissan-Honda partnership is a pooling of resources to combat the “once-in-a-century transformation in the automotive industry” that Toshihiro Mibe, Honda’s president, believes his company is currently in the midst of .
After the announcement, Nissan President Makoto Uchida promised to do so reduce the cost of electric vehicles by a thirdclaiming that his company would launch 16 new electric vehicles through its Arc business plan by 2026 to strengthen its position in the global sales charts.
A major revamp of its hybrid and pure EV offerings sold in China would also take the fight straight to its newest rivals.
Ford forms a secret team
Ford CEO Jim Farley announced earlier this year that his company has formed a “skunkworks” team of engineers and software designers, led by ex-Tesla employee Alan Clarke, to work on ways to create a low-cost ( less than €25,000 / $26,838 / AU$41,000), high-end EV that could compete in the mass market.
According to Farley, the team has been working for at least two years now to leverage the know-how of Auto Motive Power (AMP), an energy management startup that Ford acquired in 2023, to produce a flexible and comprehensive platform that would support a range of competitive but can support affordable electric vehicles.
Like most other legacy automakers, Ford has spent decades improving both the engineering and supply chain of the internal combustion engine, refining the formula to create the most cost-effective production lines.
However, the same focus has not been placed on the electric car, which relies on battery suppliers and a wide range of components, many of which are made in China and the Far East. The Chinese government, on the other hand, funded research into battery-electric vehicles as early as 2001.
Through continued government funding, numerous financial incentives and the reports of cheaper laborChina has significantly improved the quality of its electrical products and components at an astonishing pace.
Furthermore, thanks to a lack of Android Auto and Apple CarPlay in China, these automakers have also advanced on the software front, producing infotainment systems that run as smoothly as the world’s most popular smartphones, which is not a Ford thing – and nor of its western technology. counterparts – can claim.
Farley’s recent announcement of the ‘skunkworks team’ comes as the US company faces stiff competition from both the Chinese market and Tesla closer to home, which also reveals it is working on a Model 2 that could be half the price costs of the current cheapest Model 3.
That said, the fruits of Ford’s covert operation likely won’t be seen until 2026, which could be too little too late.
Renault calls for a European alliance
Luca de Meo, the charismatic CEO of Renault and chairman of the Association of European Automobile Manufacturers an open letter to European policymakers in March it called for more partnerships and greater cooperation between major European car manufacturers to ward off the threat from China.
“I believe we can achieve our goals through joint efforts and partnerships between the public and private sectors,” De Meo wrote, moving away from the trend of imposing stricter tariffs on Chinese imports and instead shifting the focus to “ consolidating forces’ such as China. has done in recent decades.
Renault’s CEO wants European leaders to subsidize and invest in homegrown EV technology, and to set up major projects that explore and improve smart charging and the supply of critical materials.
“It is to Europe’s advantage to learn from Chinese manufacturers, who are a generation ahead in the performance and cost of electric vehicles.”
“Relations with China will have to be managed,” he added. “Closing the door completely to them would be the worst possible response.”
While De Meo opts for a collaborative and openly competitive approach, the Biden administration in the US is more aggressive. The president opened a Commerce Department investigation that will examine the potential security threat posed by an influx of Chinese cars with continuously connected Chinese software.
Biden has yet to take any direct action against Chinese imports, but administration officials have made clear they are exploring and preparing a wide range of policy responses to stem the flow of Chinese imports and protect the domestic auto industry.
However, BYD previously revealed that it has no plans to launch its low-cost passenger cars in the US market at this time, despite already having a presence in North America with a factory that produces buses.
BYD Americas CEO Stella Li told Yahoo Finance that the US was “an interesting market, but it is very complicated when you talk about electric vehicles”. although reports suggest that BYD is eyeing a factory in Mexico, which would increase its share of the local market and, in theory, make it easier to export to the US.
Are the luxury car manufacturers also in trouble?
Premium brands, such as BMW, Maserati, Mercedes-Benz, Porsche, Bentley, Rolls-Royce and more recently Tesla, have proven popular in China as Western luxury brands are seen as a status symbol for the rich and famous.
However, reports suggest that Generation Z customers are driving luxury car sales in China, and this customer group, which has an average age of just 29 years, comes with its own unique set of challenges. Digital natives with a penchant for personalization and electrification, the young and affluent Chinese increasingly want more software, computing power and digital entertainment in their vehicles.
Furthermore, the car buying public in the domestic market is generally focused on pure electric vehicles, and most of the aforementioned luxury car manufacturers currently offer a very limited number of plug-in models.
This has provoked a response from China’s own carmakers, with the likes of Yanwang, Nio, HiPhi and XPeng all producing high-end electric vehicles that hope to compete with the West’s most sought-after badges, with a range of innovative features and luxurious, infinitely customizable interiors .
Western luxury car makers are increasingly having to change course to meet the demands of Generation Z, such as moving to a digital-first approach, forging exclusive partnerships with mobile gaming companies and offering a level of personalization and specification that is not even too high. available for western buyers.
While companies like Rolls-Royce or Bentley have offered a unique, tailor-made service for years, other features such as software, digital customer service, cutting-edge in-car entertainment and syncing with the owner’s online ecosystem don’t immediately come to mind.
However, these ultra-luxury brands can likely benefit from their brand cache to a much greater extent than, say, Volkswagen or Ford. Still, it won’t be long before Yangwang’s leaping, tank-turning and extremely powerful U9 model catches the attention of China’s riotous populace.