How Chinese EV Technology is Reshaping Global Automotive Design

When Audi executives first laid eyes on the Zeekr 001 in 2021, a long-range EV with European styling, it was an alarm bell for the premium German carmaker – if it wanted to rival the Chinese, it needed their tech. “The Zeekr 001 back then shocked quite everyone,” said Stefan Poetzl, president of SAIC Audi Sales and Marketing. “We needed to do something about it.”

To strengthen its EV offering for Chinese buyers, Audi developed the AUDI E5 Sportback in just 18 months using technology supplied by Chinese partner SAIC, including batteries, electric powertrain, infotainment software and advanced driver assistance systems. Audi expects to begin delivering the $33,000 EV to customers in China this month and its international competitors are now also eyeing Chinese intellectual property to launch new models swiftly.

Toyota and Volkswagen have joint development plans for China-focused models using technology from Chinese partners GAC and Xpeng, respectively. Renault and Ford want to take it further and build global models on Chinese EV platforms, sources said. Renault did not respond to a request for comment. Ford declined to comment.

Such licensing arrangements are a relatively small but expanding revenue stream for Chinese EV makers and, for now, offer a fresh quid pro quo. Global automakers need Chinese tech to jump development hurdles and bring new EVs to market fast. Meanwhile, Chinese firms urgently need extra income amid a punishing price war at home and an escalating trade conflict abroad. “It is a very smart, win-win solution,” said Will Wang, General Manager of Shanghai-based consulting firm Autodatas, which produces teardown reports of top-selling EV models.

‘CHINA INSIDE’

This new approach echoes the “Intel Inside” campaign of the 1990s – when U.S. chipmaker Intel used cutting-edge components to elevate computers into premium products. In this instance, Chinese automakers are selling EV technology in a package: the foundations for ready-to-assemble, white-label battery cars suitable even for low-volume producers with limited budgets.

Leapmotor has teamed up with Stellantis to sell its EVs outside China and is in talks with other marques to license its tech, CEO Zhu Jiangming told Reuters. Employing an off-the-shelf Chinese EV chassis and software could save billions of dollars and years of development time and help legacy automakers catch up with Chinese rivals, industry experts say.

Renault was an early adopter, building the budget Dacia Spring EV on a platform from China’s Dongfeng for sale in Europe from 2021. Renault has gone a step further with the new electric Twingo being developed at its research centre in Shanghai, with Chinese EV engineering firm Launch Design providing technical assistance in creating an EV platform, according to two people familiar with the matter. Launch did not respond to requests for comment.

Other “China Inside” models may be on the way. Ford is looking for a Chinese partner to supply EV platform technologies, said two people with knowledge of the matter. CEO Jim Farley has frequently tried Chinese EVs and recently praised Xiaomi’s SU7 electric sedan.

Volkswagen has broadened plans to develop China-dedicated models of all fuel types based on platforms co-developed with Xpeng, using Xpeng’s designs for electronics and software architecture. Analysts say incumbent automakers typically find it hard to build nimble EV systems that can be updated rapidly because of complex organisational structures.

That is why Volkswagen wants to test whether Xpeng’s EV technologies can complement or replace Volkswagen’s own, said Yale Zhang, managing director at Shanghai-based consultancy AutoForesight. If it proves successful in China, Volkswagen could apply the approach globally, Zhang added. A Volkswagen China spokesperson told Reuters its cooperation with Xpeng was focused on China for now. Xpeng’s He Xiaopeng has said the two automakers want to broaden their partnership beyond China. That would increase Xpeng’s revenue without having to build factories overseas, said Autodatas’ Wang.

Oliver Wyman analyst Marco Santino said traditional carmakers could use the “firepower” of cutthroat Chinese EV competition to leapfrog the development curve. “You get a much more quality-proof product in the market in a shorter timeframe,” Santino said.

MORE CHOICE?

Inspired by Tesla, China’s EV makers have created modular platforms that reduce costs, speed up development and lower barriers to entry. “They are quick learners from Tesla,” said Forest Tu, a former executive at Chinese battery giant CATL who founded consultancy Mapleview Technology.

That edge is now substantial enough to support “licensing and royalty service” as Chinese EV makers expand abroad, Tu said. CATL used that tactic with Ford, licensing its technology for a battery factory. Exporting Chinese tech could help less-industrialised countries establish their own “national EV brands,” Tu said.

Abu Dhabi-based CYVN Holdings, a strategic investor in Nio, has developed its own premium EV using the Chinese EV maker’s chassis and software. CYVN bought British sports car maker McLaren in April and now plans to market its EV under the McLaren name, according to two sources familiar with the matter. But future models will include much more McLaren “DNA” and less Chinese technology, one source said. Nio declined to comment. CYVN did not respond to a request for comment.

CATL’s new EV chassis, meanwhile, will let consumers “decide what an EV looks like, rather than having giant automakers decide what to sell,” its executive president Hu Guoliang said. CATL said it would scale up chassis production over the next three years after agreements with several domestic automakers. Its Bedrock Chassis made its European debut this week at the IAA Mobility show in Munich.

Whether the reciprocal advantages of China’s EV technology endure over the long term, however, remains a key question. Former Aston Martin CEO Andy Palmer said while there are R&D savings, automakers should avoid becoming overly dependent on third-party tech. “In the long-term you’re screwed because you’re just a retailer,” said Palmer.

Oliver Wyman’s Santino said the major risk for traditional automakers is that relying on another’s technology means “your capability to differentiate your brand is really limited.” By integrating their own technology, automakers can “limit the risk,” Santino added.