How Chinese EV Technology is Reshaping Global Auto Industry

When Audi executives first laid eyes on the Zeekr 001 in 2021, a long-range electric vehicle with European styling, it served as a wake-up moment for the upscale German marque – if it wanted to vie with the Chinese, it had to adopt their technology. “The Zeekr 001 back then stunned almost everyone,” said Mr Stefan Poetzl, president of SAIC Audi sales and marketing. “We had to do something about it.” To strengthen its EV range for Chinese buyers, Audi developed the Audi E5 Sportback in just 18 months using technology supplied by Chinese partner SAIC, including batteries, electric driveline, infotainment software and advanced driver assistance systems.

Audi expects to begin delivering the US$33,000 (S$42,300) EV to customers in China in September, and its global competitors are now also eyeing Chinese intellectual property to launch new models quickly. Toyota and Volkswagen have joint development plans for China-focused models using tech from Chinese partners GAC and Xpeng, respectively. Renault and Ford are looking to go further and create global models on Chinese EV platforms, according to sources.

Such licensing arrangements represent a relatively small but expanding revenue source for Chinese EV firms and, for the moment, offer a fresh quid pro quo. Global automakers require Chinese technology to leapfrog development obstacles and introduce new EVs fast. At the same time, Chinese firms urgently need extra income amid a brutal domestic price war and mounting trade tensions overseas. “It is a very smart, win-win solution,” said Mr Will Wang, general manager of Shanghai-based consultancy Autodatas, which provides teardown analyses of best-selling EVs.

This new approach mirrors the ‘Intel Inside’ campaign of the 1990s – when US chipmaker Intel used cutting-edge components to elevate computers into premium products. In this scenario, Chinese automakers sell EV technology in a package: the foundations for ready-to-build, white-label battery cars suitable even for low-volume makers with limited budgets. Leapmotor has teamed up with Stellantis to market its EVs outside China and is in talks with other brands to license its tech, chief executive Zhu Jiangming told Reuters.

Employing an off-the-shelf Chinese EV chassis and software could save billions and years of development time and help established automakers catch up with Chinese competitors, industry experts say. Renault was an early mover, building the low-cost Dacia Spring EV on a platform from China’s Dongfeng for sale in Europe beginning in 2021. The French group has taken another step with the new electric Twingo being developed at its Shanghai research centre, with Chinese EV engineering firm Launch Design supplying technical assistance in creating an EV platform, according to two people familiar with the matter.

Other “China Inside” models may be on the horizon. Ford is hunting for a Chinese partner to supply EV platform technologies, said two people with knowledge of the matter. CEO Jim Farley has often tested Chinese EVs and recently commended Xiaomi’s SU7 electric sedan. Volkswagen has broadened plans to create China-specific models of all fuel types based on platforms co-developed with Xpeng, using the latter’s designs for electronics and software.

Analysts note legacy automakers typically find it hard to build nimble EV systems that can be updated rapidly, owing to complex organisational structures. That is why Volkswagen wants to evaluate whether Xpeng’s EV technologies can supplement or replace Volkswagen’s own, said Dr Yale Zhang, managing director at Shanghai-based consultancy AutoForesight. If successful in China, Volkswagen could extend the approach globally, Dr Zhang added. A Volkswagen China spokesperson told Reuters its cooperation with Xpeng was concentrated on China for now. Xpeng’s CEO He Xiaopeng has said the two carmakers aim to widen their partnership beyond China. That would boost Xpeng’s revenue without needing to construct plants overseas, said Autodatas’ Mr Wang.

Oliver Wyman analyst Marco Santino said incumbent carmakers could leverage the “firepower” of intense Chinese EV competition to surge ahead on the development curve. “You get a much more quality-proof product in the market in a shorter timeframe,” Mr Santino said. Inspired by Tesla, China’s EV makers have created modular platforms that reduce costs, speed development and lower entry barriers. That edge is now large enough to underpin “licensing and royalty service” as Chinese EV makers expand abroad, said Mr Forest Tu, a former executive at Chinese battery giant CATL who founded consultancy Mapleview Technology.

CATL took that route with Ford, licensing its technology for a battery factory. Exporting Chinese know-how could help less-industrialised nations establish their own “national EV brands”, said Mr Tu. Abu Dhabi-based CYVN Holdings, a strategic investor in Nio, has developed its own premium EV model using the Chinese EV maker’s chassis and software. CATL’s new EV chassis, meanwhile, will let consumers “decide what an EV looks like, rather than having giant carmakers decide what to sell”, said executive president Hu Guoliang. The company said it would ramp up chassis production over the next three years after signing 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 longer term, however, remains a central question. Former Aston Martin CEO Andy Palmer said while there are savings in R&D, carmakers should avoid excessive dependence on third-party tech. “In the long term, you’re screwed because you’re just a retailer,” said Mr Palmer.