New energy vehicles have become a major trend in the automotive industry, with many traditional Chinese car companies seeking to transition into this new sector. The timeline for phasing out fuel-powered vehicles is now in full countdown. Today, domestic cars are entering the era of "smart machines." Can China give birth to its own Tesla?
In recent years, the global recognition of Chinese brands has been driven by two key trends: the internet and mobile phones. The former helped Silicon Valley recognize a second center of innovation, while the latter enabled the rise of smartphones beyond the dominance of Samsung and Apple. A third potential powerhouse on the horizon is artificial intelligence.
Among these, the rapid growth of Chinese smartphones has been particularly impressive. In just five or six years, they have completely shed their "knockoff" image and reshaped the global smartphone market. These opportunities stem from the smartphone revolution.
A shift in direction can lead to fundamental changes in the low-quality, inferior "cottage" products of the past. From that point on, the history of the Chinese smartphone industry was rewritten. Today's domestic cars resemble the functional phones of the past—still at the bottom of the global automotive hierarchy. But is this trend enough to break the weakness of independent brands in the global auto market?
And this moment may be arriving.
New Opportunities for Domestic Cars: New Energy Vehicles as a New Outlet
Despite high sales volumes and favorable market conditions for domestic auto brands, loyal fans and patriotic consumers still support them. However, it must be acknowledged that domestically produced cars remain at the bottom of the automotive industry's esteem. Generally speaking, imported cars are considered higher quality than joint-venture models, which in turn are seen as superior to self-owned brands. This situation hasn't changed much despite shifts in the market.
Looking more broadly, the gap caused by the late start of the domestic auto industry is far from being closed in just a few years of reverse R&D. This is evident from the supply chain. For example, the engine technology used by self-owned brands is mainly supplied by foreign companies, with Mitsubishi Motors being the largest. Over 90% of independent brands use engines from Mitsubishi. The same applies to gearboxes and chassis, which are mostly sourced from Japanese, German, and American companies. It's clear that the major suppliers of automotive parts are concentrated in these countries.
This reality highlights the dependence of Chinese car companies on foreign core components and their vulnerability. Just this year, GAC Chuanqi was forced to cut production due to issues with Japan's Aisin, once again exposing the pain of being dependent on suppliers. Moreover, the role of suppliers goes beyond just providing parts. In some joint-venture or independent brands, suppliers control everything from standards to product verification, leading to numerous loopholes in manufacturing and a significant drop in vehicle quality.
The power of suppliers is just a microcosm of the global automotive industry. Overall, from design and manufacturing to sales, foreign companies have already captured most of the industry's profits, and this situation is difficult to change. If domestic automakers want to compete with these giants, they may only have one chance: to restart from scratch. And new energy vehicles might be that opportunity.
According to data released by the Federation in September, the sales of new energy passenger vehicles reached 58,217 units, up 90% compared to the same period last year and 10% higher than August. Among them, pure electric vehicles sold 45,562 units, an 8% increase from the previous month, accounting for 78% of new energy vehicle sales. Plug-in hybrids sold 12,655 units, a 19% increase from the previous month, making up 22%.
In line with market reaction, there are also favorable policies. For instance, the recently announced dual-point management method allows positive points to be carried forward, compensated, and transferred among affiliated companies, effectively creating favorable opportunities for new energy vehicles.
The policy is clear, and the future looks promising. Major domestic automakers are increasingly focusing on new energy vehicles. For example, Roewe recently unveiled the Vision E “Light Wing Concept Car†in Shanghai, which is another masterpiece in the independent brand market after RX5. Through this car, you can see SAIC’s direction and determination in the industry.
Can SAIC use the Roewe "Light Wings" concept car to become the dark horse next year?
Under the current circumstances, the chances of self-owned brands competing against foreign traditional automobile giants may be slim. However, the zero-to-one leap has shown the determination of major auto companies. Now, the competition among independent brands is fierce, especially with the emergence of new energy vehicles, which creates more possibilities for market changes. This will inevitably include the power game among domestic giants like Great Wall, Changan, SAIC, and Guangzhou Automobile.
Looking at the market performance from last year and the first nine months of this year, it's clear that Chang’an and Great Wall have seen a decline in business, while Geely, SAIC, and Guangzhou Automobile have seen relatively higher growth. If this trend continues, the structure of the first and second echelons of the domestic auto industry may undergo significant changes, and SAIC is undoubtedly one of the strongest contenders due to its high growth rate.
[Image: Domestic cars counterattack, aiming at new energy vehicles, or becoming a dark horse in the industry]
According to the sales data provided by SAIC passenger cars in September, from January to September this year, SAIC and its two brands sold 361,386 new cars, a 88% increase compared to the same period last year. According to the plan at the beginning of the year, Roewe and MG were expected to complete a sales target of 500,000 in 2017. Based on the current growth rate, it is very likely that the target will reach 600,000 units. Moreover, according to the monthly sales growth rate of the five major independent brands, SAIC's own brand is also the fastest growing.
Why did SAIC's own brand start relatively late but show a trend of catching up? Personally, this is mainly because SAIC has gradually established its own advantages through continuous trials. The most important point is the industrial design of the car, which is especially important in the reality where domestic independent brands are forced to take the cost-effective route.
Take the newly launched Vision E “Light Wing†concept car as an example. This pure electric vehicle is recognized as the flagship product of SAIC in the field of new energy vehicles next year. From the name, it can be seen that the design of the entire vehicle revolves around the word “light.†From the Galaxy light ring on the interior glass ceiling to the external ring flash LED light, L-shaped fog light, and deep three-dimensional C-type tail light, the whole car does not have a light bulb, yet it has become the brightest car in the history of Roewe.
[Image: Domestic cars counterattack, aiming at new energy vehicles, or becoming a dark horse in the industry]
Moreover, “light†is not just brightness; it also combines elements like light flow and color with the car’s lines. For example, in addition to the “winged grille†design, piano paint material and parametric texture are added, giving the impression of stars surrounding the logo. In terms of color, the exterior body color is inspired by “extreme night,†using the purest blue — Klein Blue. The interior color is inspired by “extremely,†with the IP platform as the visual center, symbolizing the first morning light of the sky.
Additionally, the “Light Wing†concept car will also use Roewe’s unique “Dongyun West Law†design philosophy, incorporating whale head swallowtail, double-drive waistline, and fascinating meat design methods, clearly showcasing the wing of light and placing oriental charm at the core.
Objectively speaking, the single-view design of the “Light Wing†concept car can be considered the most dazzling in the Roewe series, once again proving the strength of SAIC Shao Jingfeng and the SAIC DESIGN car design team.
The wind is coming—can the independent brand take advantage of the domestic machine?
Around 2010 marked a turning point for domestic phones. Before that, low-quality knockoffs were always the label of domestically produced machines. Foreign brands like Motorola and Nokia dominated more than half of the domestic market. At that time, the era of functional and semi-smart devices made it nearly impossible for domestic brands to compete with the giants, even struggling with basic survival.
Because there was neither an industrial base nor technical reserves in China, no breakthroughs could be found to change the industry situation, and companies had to survive through imitation. This is very similar to the current status of domestic vehicles in the global and domestic markets, but the difference is that domestic phone brands caught up with the industry wave and have since been on a rising trajectory.
It is reported that in the domestic market, the share of domestic smart phones grew from less than 10% before 2009 to over 80% in 2016. Within six years, the rise of domestic phone brands was witnessed. It was the smart machine trend initiated by Apple that broke through the two mountains in the mobile phone market, allowing domestic manufacturers to grow rapidly and reach this point today.
From this, we can see that for domestic enterprises that started late and lacked hard power, the only hope to defeat foreign giants may be to break through a new technological wave. From this perspective, new energy vehicles are the future trend of the automotive industry. On this basis, can domestic independent brands also have the same development opportunities as smartphones?
Perhaps we can refer to the market environment back then. Looking at the history of the development of domestic phones, we can see that in addition to their own strategic vision, the success of brands like Huawei and Xiaomi in catching up with the smart phone trend was also due to the support of Google Android and the leadership of Apple.
Corresponding to the current automotive industry, it may be the upgrade of the vehicle system and the leadership in new energy vehicles, especially the former has already begun to emerge. Since SAIC and Alibaba partnered to create the Roewe RX5, this product, defined as the first Internet car, is currently on top of several sales charts. Now, SAIC has introduced a subversive concept—“Internet X New Energy†through the “Light Wings†concept car.
Among these, Zebra Zhixing, an open platform based on AliOS, has played a crucial role in the “Light Wing†concept car, demonstrating Alibaba's ambition in intelligent service provision. It is reported that Zebra Zhixing supports users' natural screening, service providers, and supplier developers.
For example, if I buy a movie ticket with my mobile phone Alipay, when driving, Zebra will tell me the route to the cinema. If it's time to eat, it may recommend a nearby restaurant waiting for me. After watching the movie, Zebra will set the route for my return home.
In fact, Alibaba, Tencent, and Baidu are all working on related intelligent systems. This means that with the cooperation of internet giants, domestic independent brands will have more opportunities in the new energy vehicle market. As for the so-called industry leaders, none have emerged yet, but there may be a phenomenon-level product that accelerates the development of new energy vehicles. At that time, it is not impossible to breed China’s “Tesla.â€
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