On 1 April 2025, a tragic accident involving Xiaomi’s SU7 sedan, operating in semi-autonomous mode, claimed three lives in Tongling, Anhui province, when the vehicle crashed into a concrete barrier and caught fire. The incident, which occurred seconds after the driver took manual control from the advanced driver assistance system (ADAS), has prompted swift regulatory action from the Chinese government. According to Reuters, as part of China’s autonomous driving crackdown, the Ministry of Industry and Information Technology (MIIT) has banned automakers from using terms like “smart driving” and “autonomous driving” in advertisements and tightened rules on over-the-air software updates for ADAS, requiring government approval before implementation. This move, following widespread safety concerns, raises questions about the future of autonomous vehicles in China and beyond.

China’s autonomous driving market: Growth and value

China is the world’s largest automotive market, and its self-driving car sector has been a key driver of innovation. According to industry estimates, the global autonomous vehicle market is projected to reach USD 42.87 billion in 2025, with China playing a significant role due to its aggressive push for intelligent connected vehicles (ICVs). The city of Shenzhen, for instance, aims to generate 200 billion yuan (approximately £25 billion) in revenue from its ICV industry by 2025, supported by 944 km of public roads opened for autonomous vehicle testing. Nationwide, over 1,160 km of roads are available for trials, with companies like Baidu, Pony.ai, and WeRide operating autonomous taxis and shuttles in cities such as Wuhan, Guangzhou, and Beijing.

The Chinese government’s support, including policies like the 2020 strategy for autonomous vehicle development, has fuelled this growth. By 2025, China aims to achieve large-scale production of Level 3 (conditional automation) vehicles and market launches of Level 4 (high automation) vehicles in select scenarios. The market’s competitiveness is evident in the rapid adoption of ADAS, with companies like BYD integrating features such as lane-keeping and adaptive cruise control into affordable models priced as low as USD 9,555. However, the recent Xiaomi crash has exposed vulnerabilities in these systems, prompting regulators to prioritise safety over marketing hype.

A wake-up call for the industry

Markus Levin, Co-Founder of XYO, a decentralised data network for location-based technologies, views China’s regulatory crackdown as a pivotal moment for the global autonomous driving industry. “China’s move is a wake-up call for the entire industry. It shows that the industry desperately needs smarter infrastructure,” Levin explains. He argues that current self-driving systems, reliant on individual vehicle sensors, often fail to capture the broader context of the environment, such as real-time weather patterns, road hazards or traffic conditions.

XYO’s technology aims to address these limitations by providing a decentralised network of over 8 million nodes, primarily from smartphones and other IoT devices, that collect verified, real-time data. “Instead of just knowing how an individual car relates to the world around it, XYO allows a much larger amount of information,” Levin says. XYO’s infrastructure could enable vehicles to share verified information anonymously in the future, to enable vehicles to dynamically adapt to road conditions, potentially preventing accidents like the Xiaomi crash by filling in the blind.

Implications of China’s autonomous driving crackdown for ADAS development globally

The Xiaomi incident has sparked debate about whether China’s stringent regulations will influence ADAS development in the US, Europe, and elsewhere. Levin believes the impact will be significant but not necessarily negative. “Most self-driving systems today can’t yet ‘see’ the world as well as we do. They interpret the world through sensors but can miss the bigger picture humans can perceive,” he notes. By highlighting the risks of overhyping ADAS capabilities, China’s actions may push global manufacturers to invest in more robust systems.

In the US, companies like Waymo and Cruise are advancing Level 4 autonomous vehicles, with Waymo reporting 100,000 weekly paid robotaxi rides by August 2024. Europe, meanwhile, is seeing increased adoption of Level 2+ systems, which offer partial automation but require driver supervision. However, both regions face challenges similar to China’s, including public scepticism and regulatory scrutiny following high-profile incidents. For instance, Tesla’s “Full Self-Driving” system has been criticised for misleading marketing, with the National Highway Traffic Safety Administration (NHTSA) linking it to hundreds of crashes. Levin suggests that technologies like XYO, which provide a “live, trusted map of the road,” could help bridge these gaps by enhancing ADAS reliability across markets. Primary Source: Interview with Markus Levin.

The role of XYO in accelerating autonomous driving

Progress in ADAS is undeniable, but Levin argues that the pace of advancement is constrained by the limitations of current data infrastructure. “ADAS are improving, but progress has limits without better data,” he says. XYO’s network, which has collected billions of data points through its smartphone app and other nodes, offers a solution by enabling vehicles to share verified information anonymously. This could include critical details like tire pressure, vehicle speed, or the location of roadblocks, creating a comprehensive, real-time picture of the driving environment.

Levin envisions XYO as a catalyst for safer autonomous driving. “Pairing this network with vehicle speed sensors could fill the blind spots in current ‘self-driving’ systems to prevent accidents before they occur,” he explains. By integrating XYO’s data into ADAS, manufacturers could enhance system reliability, potentially accelerating the transition to higher levels of autonomy. This is particularly relevant in China, where the government’s focus on safety could create opportunities for technologies that address current shortcomings. Primary Source: Interview with Markus Levin.

The future of autonomous driving in China and beyond

China’s ban on terms like “autonomous driving” reflects a broader effort to align marketing with the actual capabilities of ADAS, ensuring drivers understand the systems’ limitations. While this may slow the pace of marketing-driven innovation, it could foster more rigorous testing and development. The global autonomous vehicle market is expected to grow at a compound annual growth rate (CAGR) of 23.27%, reaching USD 122.04 billion by 2030, with China remaining a key player despite its regulatory tightening.

For the US and Europe, China’s actions serve as a reminder of the importance of safety and transparency in ADAS development. Technologies like XYO’s decentralised data network could play a critical role in addressing these challenges, offering a scalable solution to enhance situational awareness for self-driving systems. As Levin concludes, “To truly move toward safe autonomous driving, vehicles need access to reliable, real-time location data beyond what their own sensors can see.” The Xiaomi crash may have exposed the industry’s vulnerabilities, but it also underscores the potential for innovative solutions to drive the future of mobility.

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2024 started with a surprise for the automotive industry as Chinese manufacturer BYD announced that it sold more battery electric vehicles (BEVs) (526,409) than Elon Musk’s Tesla (484, 507) in Q4 of 2023. This is the first time that sales by a Chinese company have outpaced the US titan.

BYD (short for ‘Build Your Dreams’) was founded in 1995 with an initial focus on rechargeable batteries. It expanded into automotive after buying a Shaanxi-based car company in 2003, using its battery experience and supply chains to pivot to electric vehicles. It sold over 3 million EVs in 2023 (including both hybrid and battery-only models), an increase of 62% over 2022. Its popular models include the best-selling Qin Plus, a compact car that retails for between RMB 99,800 and 176,800 (£11,065-19,602), the Dolphin hatchback, which retails for between RMB 116,800 and 139,800 (£12,949-15,497), and the premium Yangwang SUV.

Technically, Tesla still sold more BEVs across the whole of 2023 (1.81 million vs. BYD’s 1.57 million), and it remains the world’s most valuable car maker, but as Sino Auto Insights noted, “symbolically an important line has been crossed”. Tesla’s innovative approach, high-performance vehicles and strong branding (driven, in part, by the inescapable figure of Elon Musk) have contributed to its dominant position, but its higher price point has made it less accessible to a broader market segment, an area where BYD has gained a competitive edge.

This edge over other Chinese brands and, increasingly, international brands, has been sharpened by a number of external and internal factors.

Like all Chinese EV companies, BYD has benefitted from extensive Chinese government subsidies over the past few decades. The government has been subsidising producers of EVs for public transport, taxis and the consumer market since 2009. More than RMB 200 billion (£22.14 billion) was spent on EV subsidies and tax breaks in China over the 2009-2022 period. Moreover, EV consumers in China have received purchase subsidies from the government for a number of years.

China also has a very strong position in the supply chains for the critical materials used to make EV batteries, especially rare earths. At present, China accounts for 85% of the world’s rare earth processing and 92% of rare earth magnet production.

In terms of internal factors, BYD has also obviously benefitted from its background as a battery manufacturer, which has given it a head start in terms of technology and access to materials. By keeping battery production in-house, it can also achieve significant cost savings.

The big threat posed by BYD’s recent success is increased competition for established automotive brands.

Western markets have largely taken a protectionist stance in response to the massive growth of China’s EV sector. In September 2023, the European Commission launched an investigation into whether to impose higher tariffs on Chinese BEVs (the standard EU tariff on imported vehicles is 10%). The US currently imposes 25% tariffs on Chinese automobiles, and the Biden administration is reportedly considering upping this levy. Chinese automakers could get around this by setting up factories in Europe or in Southeast Asian countries.

Nevertheless, some commentators suggest that BYD and Tesla are so far ahead of the field that other companies are already struggling to compete. Indeed, their growth is showing that brand recognition or company history are not predictors of success in the EV market. Future growth will come down to things like AI integration and battery technology, rather than just the cars themselves, giving Silicon Valley and fast-moving Chinese companies a leg-up over traditional car manufacturers.

Now the question for BYD will be whether it can translate its current sales figures, most of which are concentrated in the Chinese market, into global success. For Tesla and other EV manufacturers, the rise of BYD serves as a call to innovate in an increasingly competitive market, innovation that could have a positive knock-on effect in other areas. Ultimately, getting more EVs of any brand on the road is an important step towards giving more people more access to sustainable transportation options.

The post How a Chinese EV brand overtook Tesla appeared first on Focus - China Britain Business Council.

In 1907, some very, very optimistic Europeans — including an Italian Prince, a French racing driver, and a conman or two – gathered in the French Embassy in Beijing to start their long journey across the Gobi, into Mongolia, across the vastness of Russia into Europe and finally down to Paris. Bandits, wolves, angry locals and petrol thieves all added to their problems, as well as cars that were, to say the least, not always totally reliable.

But The Race to the Future is not just about a car race, it’s about a changing world, from one we wouldn’t recognise to one we most certainly do. And it’s about China’s introduction to that now long ubiquitous invention of the modern age – the combustion engine. Paul French caught up with the book’s author Kassia St Clair to talk cars, China and modernity…but not to give away who won the race!

First of all, the race itself. Who had the idea, what were the rules and why on earth start in Peking of all places where cars were virtually unknown and roads basic to say the least in 1907?

The idea came from the Parisian newspaper Le Matin, possibly in collaboration with the owner of the De Dion Bouton car brand, who was brilliant at marketing his vehicles and always keen to make a splash. It was organised in a hurry, and the planning phase was short and a bit chaotic. The result was that there were few concrete rules, and because these shifted over time, drivers were unsure about them. For example, they didn’t really know how long they were expected to stick together as a team and where and when it went from ‘group endeavour’ to ‘race’. The route was something of a classic: it had been done by other writers previously on horseback or using the train. People of that time liked the alliteration and the idea that they were travelling from the ‘capital’ or ‘heart’ of the East to that of the West.

Who were the competitors, and did any car brands we might still recognise today take part?

The competitors were a mixed bunch. The best-known was an Italian prince from the Borghese family. This was one of the most prestigious families in Italy: the Borghese gardens in Rome are named after them, and one ancestor had been a pope. Car enthusiasts, particularly those interested in the early days, would recognise the De Dion-Bouton name; this was one of the best-known car brands of this time (a 1907 De Dion-Bouton car is featured in the lead image of this article). The Itala was also very prestigious; it was an Itala vehicle that was used to open the Brooklands track that same year. The others – the Contal and the Spyker – were more obscure.

Had anyone in China actually seen a car yet in 1907?

Yes! Although the journalists and the drivers flattered their readers back home in France, Britain and Italy by suggesting that theirs were the very first vehicles in China, we know that wasn’t the case. Articles about car parades and letters complaining about reckless drivers in Shanghai and other large cities were being sent to newspapers in the years before the race. We also know that Empress Dowager Cixi owned an early American Duryea vehicle.

So many new technologies were in play during the race, new technologies China was to both occasionally fear and sometimes embrace wholeheartedly. How did race updates get back to Europe and America from China?

This race was as much about the telegraph system as it was about the automobile. The route selected was the one that cleaved to the telegraph wires, so that journalists could send articles back as often as possible, and reports and updates were reprinted all over the world, from Hawaii to Tasmania. By the time the cars had reached western Russia, people knew exactly who the racers were and were often lining the roads to greet them because they’d been reading reports of their progress.

I’m frankly amazed the cars didn’t fall apart ten minutes outside Beijing – no expressways or Ring Roads then! But also there was no infrastructure to support cars – how did they get spare parts, and more importantly, petrol?

So, not all the cars survived the journey, and it also wouldn’t be true to claim that the cars drove the whole way. In lots of places, particularly in the mountain passes to the north of Beijing, they had to be physically dragged by pack animals and teams of people. The motorists carried a lot of spare parts with them, but fuel and oil had to be transported separately and left in caches along the route. In Russia and Europe, this was done largely by train and horse and cart, but in China and Mongolia, fuel and oil were transported by camel and mule.

The cars, the telegraphs… it must have all seemed incredibly modern to the often anti-modern Qing Dynasty (on its way out, but still in power). What did the Chinese government take away, if anything, from this display of modernity in the imperial city?

The Qing Dynasty leaders were deeply suspicious of the entire affair; lots of the motorists had some army experience, and the Chinese officials seemed to have feared that the automobiles were being used to scope out the territory. While the journalists and diplomats protested loudly and vigorously that these suspicions were groundless, we do know that the military applications of the automobile were being seriously considered. For example, a Russian government official explicitly linked the success of the Peking to Paris race to the possible use of cars in warfare. Ultimately, however, the Qing dynasty was unable to resist the pressure from foreign diplomats to allow the race to continue, and the idea of motorcars rushing across China became a really strong symbol of Western power and modernity in the accounts written by contemporaries. It was also obvious that China was a lucrative potential market: one of the entrants actually returned to China not long after the race to open a motorcar concession.

The post A new book examines a quirky 1907 Peking to Paris car race appeared first on Focus - China Britain Business Council.

With an increasing focus on reducing greenhouse gas emissions and combating air pollution, China’s aggressive push towards NEV use is not only environmentally conscious but also a strategic move to establish itself as a global leader in clean transportation solutions.

The Chinese government’s commitment to transitioning to clean energy transportation is evidenced by its stringent regulations and policies. To promote the adoption of NEVs in the commercial sector, several key requirements and incentives have been put in place:

• China has introduced an NEV Credit System that mandates automakers to generate a certain number of credits by producing and selling NEVs. Failure to meet these requirements results in penalties. This policy applies to both passenger and commercial vehicles, pushing manufacturers to incorporate cleaner technologies into their fleets.
• The Chinese government provides subsidies for NEV purchases, which includes commercial vehicles like buses and lorries. These subsidies aim to reduce the upfront cost of NEVs, making them more attractive to consumers and fleet operators.
• Several major cities in China, including Beijing, Shanghai, and Shenzhen, have implemented zero emission vehicle mandates that require a certain percentage of newly purchased public transportation vehicles to be electric. This drives the demand for electric buses and other public service vehicles.
• Stricter emission standards for traditional internal combustion engine vehicles have been put in place to encourage the adoption of cleaner alternatives. These standards, such as China VI, incentivise the use of NEVs by making it challenging for conventional vehicles to meet the required emissions criteria.

China’s electric bus market has seen exponential growth in recent years and is considered one of the most mature and extensive in the world. According to data from Mordor Intelligence, the market’s growth can be attributed to a combination of government support, technological advancements and increasing urbanisation.

Generous subsidies, tax exemptions and grants provided by the Chinese government have significantly propelled the adoption of electric buses. These incentives have helped reduce the cost differential between electric and conventional buses, making the former more financially viable.

Chinese electric bus manufacturers such as BYD and Yutong, the largest EV bus manufacturer in the world, have invested heavily in research and development, leading to technological breakthroughs such as longer battery life, faster charging and improved energy efficiency. These innovations have boosted consumer confidence in electric buses.

“China has pushed ahead, determinedly and with government support, the move to electric buses”, says David Gregory, China Market Business Advisor, CBBC. “For example, in the southern city of Shenzhen, the entire bus fleet of circa 16,000 is all electric. Several China bus makers are exporting to other countries, including the UK, to support their transition to electric fleets.”

Despite its success, China’s electric bus market faces challenges related to battery technology, range anxiety, and charging infrastructure. However, these challenges have opened doors for collaboration and innovation, spurring advancements in battery technology and charging networks.

Battery technology, in particular, will likely continue to improve, leading to longer ranges, faster charging times and reduced costs. This will alleviate some of the current challenges associated with electric buses. Chinese electric bus manufacturers are expected to explore international markets more aggressively, leveraging their technological expertise and competitive pricing to secure contracts in other countries.

While electric buses have been at the forefront of China’s NEV push, there is also growing interest in hydrogen-powered trucks for commercial transportation. Hydrogen fuel cell technology presents an alternative to battery-electric vehicles, offering longer ranges and faster refuelling times. The Chinese government has recognised the potential of hydrogen-powered vehicles and has initiated efforts to develop the hydrogen economy. Shanghai Sinofuelcell, China’s largest producer of hydrogen fuel cells for vehicles, has forecasted that its sales will more than double in 2023 and that at least 2,500 new hydrogen-powered vehicles will make it onto the roads this year. However, this technology is still in its nascent stages and faces challenges such as production costs, infrastructure development and hydrogen sourcing.

NEVs in the commercial transportation sector are undergoing a transformative shift toward cleaner alternatives. With stringent regulations, robust incentives and a commitment to technological innovation, China has positioned itself as a global leader in the adoption of commercial electric vehicles in particular. Furthermore, the exploration of hydrogen fuel cell-powered trucks showcases China’s willingness to explore diverse solutions to meet its clean transportation goals. Over the next couple of decades, the evolution of China’s NEV landscape will have implications for the global transportation industry as a whole.

The post Why China’s approach to commercial NEVs is so admirable appeared first on Focus - China Britain Business Council.

Over the last few decades, China has become a global automotive giant. This remarkable growth has been paralleled by the development of a solid car dealership model, initially centred around the ‘4S system’ – an acronym for ‘sales, service, spare parts and surveys’. However, as the Chinese market reaches a new level of maturity and consumer preferences undergo a seismic shift, the once unshakable dealership model is undergoing a profound transformation, redefining the way cars are sold and serviced.

For decades, the 4S dealership model formed the bedrock of China’s automotive retail industry. This system proved immensely lucrative for dealerships. The appeal of a one-stop-shop experience, where customers could seamlessly transition from purchasing a vehicle to making sure it was running smoothly, significantly contributed to the popularity and financial success of 4S dealerships.

“As private car ownership continues to grow in China, the way in which cars are sold to the customer is undergoing change,” says David Gregory, China Market Business Advisor, CBBC. “In some cases, we are now seeing examples of car manufacturers striving to develop a more direct relationship with their customers rather than relying solely on the 4S dealership routes to market.”

The momentum is shifting away from new car sales as the second-hand car market gains unprecedented traction. A multitude of factors play into this transformation – a burgeoning middle class now prioritises cost-efficiency, a heightened consciousness towards sustainability impacts purchasing choices, and the quality of used vehicles has notably improved. Moreover, economic uncertainties and evolving consumer priorities have led prospective buyers to explore alternatives, with the second-hand market offering a compelling option.

The shifting dynamics of China’s automotive landscape have prompted industry leaders to explore unconventional avenues for vehicle sales. Alibaba’s car vending machines stand out as a prime example. These machines, offering test drives to potential buyers with strong credit scores, deliver an engaging and memorable experience while harnessing technology to streamline the sales process. However, Alibaba is not alone in this quest for innovation.

Jaguar Land Rover (JLR) has introduced a direct-to-customer sales approach, bypassing traditional dealerships in certain cases. Through their online platform, customers can configure, purchase, and even finance their vehicles without ever setting foot in a physical showroom. This approach caters to a digital-savvy consumer base while simplifying the purchasing process.

BMW, on the other hand, has embraced augmented reality (AR) and virtual reality (VR) technologies. Prospective buyers can now use their smartphones or VR headsets to explore detailed virtual showrooms, inspect vehicles inside and out, and even take virtual test drives. This innovative approach not only enhances the customer experience but also caters to the rising demand for digital engagement.

To attract a broader customer base and counter the challenges of slowing new car sales, many dealerships have started offering flexible financing options and long-term payment plans. These initiatives aim to ease the financial burden of purchasing a new vehicle and make it more accessible to a wider range of consumers. By breaking down the total cost of the vehicle into manageable monthly payments, dealerships are enticing individuals who might have previously been deterred by the upfront costs.

The evolution of China’s car dealership model is emblematic of the country’s ongoing transformation on multiple fronts – from economic development to consumer preferences and environmental sustainability. As the market continues to evolve, industry players must remain adaptive and inventive, responding to changing trends and seizing novel opportunities. The convergence of technology, changing consumer behaviours and a commitment to environmental consciousness is redefining the way vehicles are bought, sold and serviced in the world’s largest automotive market.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post Is China’s car dealership model changing? appeared first on Focus - China Britain Business Council.

The growth of autonomous vehicles, both in China and around the world, is underpinned by a symphony of cutting-edge technologies. By bringing together artificial intelligence (AI), sensor systems, cameras, lidar (light detection and ranging), radar modules, and intricate algorithms, vehicles have the potential to perceive their surroundings, make instantaneous decisions, and navigate seamlessly.

China’s tech giants, including Baidu, Alibaba, and Tencent, are injecting substantial cash into AI and autonomous driving research, propelling a competitive ecosystem that is only fuelling innovation and progression.

British ingenuity is also playing a role in China’s autonomous vehicle field. Oxford Instruments, renowned for its scientific apparatus, has ventured into autonomous vehicles by contributing sensor technologies, including high-precision magnetometers. These sensors play a pivotal role in accurately determining a vehicle’s position and orientation, fundamental for the intricacies of autonomous navigation.

“The idea of autonomous vehicles is slowly, step by step moving towards becoming a reality, and progress is being made to develop, test and build regulatory frameworks for these to operate both in China and the UK. The technology required in these vehicles presents opportunities for UK companies who have demonstrable expertise in this area,” says Mark Xu, CBBC Sector Lead, Advanced Manufacturing and Transport.

Chinese automakers have also been pioneering autonomous vehicle technologies. For example, NIO, a leader in the electric vehicle field, has received acclaim for its electric SUVs with advanced driver assistance systems. NIO’s innovative “Navigate on Pilot” function allows advanced hands-free driving on highways, ushering in a new era of convenience and safety.

Although the journey towards the widespread adoption of autonomous vehicles is progressing, several hurdles remain. The intricate nature of urban environments, the unpredictability of traffic, and the challenges posed by adverse weather conditions underscore the complexities of autonomous operations. Ensuring the safety of both passengers and pedestrians in diverse scenarios continues to be a major challenge.

Navigating the regulatory labyrinth constitutes another significant barrier. The lack of standardised regulations for testing and deploying autonomous vehicles poses a challenge to seamless expansion. Public acceptance and trust, pivotal for mainstream adoption, necessitate comprehensive awareness campaigns and tangible demonstrations of the technology’s reliability.

The push towards autonomous vehicles in China has a range of implications. On one hand, autonomous technology has the potential to alleviate traffic congestion, curtail accidents, and augment mobility for vulnerable segments such as the elderly and those with disabilities. However, the widescale adoption of autonomous vehicles could catalyse employment disruption in sectors like transportation and delivery, necessitating policies to manage workforce transitions.

China’s ambitions in autonomous driving extend beyond passenger vehicles. The realm of public transportation, including buses, has also garnered significant attention, and initiatives to develop autonomous buses and other public transportation modes are underway. Pilot projects involving driverless buses have been tested in various cities, with notable progress made in areas such as route optimisation, passenger safety and energy efficiency.

Beyond conventional passenger vehicles, Pony.ai, fortified by investments from both China and the US, has ventured into the realm of autonomous public transportation. Operating a robotaxi service within specific geofenced areas, Pony.ai is realising China’s aspiration to amalgamate technology and real-world applications, enriching urban mobility.

British original equipment manufacturers (OEMs) and tech companies have an opportunity to harness the potential of China’s surging autonomous vehicle market. With their proficiency in sensors, AI algorithms and software development, British entities can establish strategic partnerships with their Chinese counterparts, facilitating technology transfer and collaborative innovation. As China’s autonomous ecosystem flourishes, avenues for cross-border cooperation emerge.

China’s journey into the autonomous realm mirrors its commitment to innovation and technological advancement. With a blend of local dexterity and global collaboration, China has the potential to redefine transportation paradigms. British firms are presented with an unprecedented opportunity to steer the course of China’s autonomous odyssey, contributing to the creation of safer and more efficient mobility solutions that resonate globally.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post The Future of Autonomous Vehicles in China appeared first on Focus - China Britain Business Council.

Over the last few decades, the rise of the middle class, rapid urbanisation, and robust economic growth have all contributed to a surge in car ownership in China. As the world’s largest automotive market, China currently represents nearly one-third of all global car sales. Moreover, the country’s domestic car production is continuing to expand, attracting both international and domestic automotive brands and driving the demand for car parts.

“China’s average car age is low; currently at around 5 years old. To give a comparison, in the UK the average is around 10 years old. As the cars in China age, the requirement for spare parts, for general maintenance and repair will also increase, in line with this growth,” says David Gregory, China Market Business Advisor, CBBC.

Although the landscape is promising, significant challenges need to be addressed to fully unlock the potential for growth in China’s car parts market. The most formidable challenge is the extensive fragmentation that characterises the sector. The market is saturated with independent service outlets, ranging from small-scale neighbourhood repair shops to larger, specialised service centres, all catering to a diverse range of customer needs. This fragmentation poses a substantial barrier for international businesses aiming to establish a significant presence in the market.

China’s car service centres are rapidly adopting new technologies to enhance their offerings. Advanced diagnostic tools, electronic vehicle health monitoring systems, and even AI-powered predictive maintenance are becoming increasingly prevalent. These technologies enable service centres to provide more accurate and efficient repairs, thus improving customer satisfaction.

A number of car companies are at the forefront of embracing these technologies in their service centres. Notable international players such as Tesla and BMW are leveraging AI and connectivity to offer remote diagnostics and software updates. Homegrown brands like Nio are also incorporating advanced technologies to enhance customer experience and optimise vehicle performance.

The car repair sector in China is also witnessing a transformation in terms of required skills. As new technologies become integral to the industry, the demand for technicians skilled in diagnosing and repairing advanced electronic systems is growing. Additionally, expertise in handling electric vehicles (EVs) is becoming crucial, given the rapid adoption of EVs in China. This demand for specialised skills presents both a challenge and an opportunity for the industry.

However, certain skills are still lacking within the sector. A shortage of technicians proficient in handling cutting-edge technologies remains a concern. Bridging this skill gap will be crucial for the industry’s sustainable growth – and could present an opportunity for UK skills providers like the Institute of the Motor Industry. “[Certification for technicians and fitters can] contribute to a more skilled and knowledgeable workforce in the parts and service industry and can be seen as an important aspect of welfare for China/UK parts distributors and enterprises,” says Herbert Lonsdale, Global Skills Ambassador for the Institute of the Motor Industry.

There are promising prospects all around for UK businesses in China’s car service sector. “The UK continues to be associated with high-quality manufacturing and engineering expertise. This reputation can give UK parts providers a competitive advantage in the Chinese market, where discerning consumers’ value premium products,” says Lonsdale. “British-made parts can command a premium price and attract customers seeking reliable and well-engineered components. China is also actively investing in research and development, aiming to become a global leader in technological innovation. There are opportunities for UK parts providers to collaborate with Chinese counterparts to leverage their advanced manufacturing technologies and enhance their product offerings”.

As the average age of vehicles on Chinese roads increases, the demand for servicing and repairs is set to soar. This presents a significant growth opportunity for businesses in the servicing sector. Independent service centres that can provide specialised maintenance and repairs tailored to the evolving needs of ageing vehicles are poised for success.

A noteworthy trend in China’s car parts market is the rise of one-stop service centres. These comprehensive service hubs offer a range of solutions, including repairs, maintenance, and access to spare parts – all conveniently located under one roof. This trend aligns with the preferences of modern consumers for integrated services, opening a unique avenue for businesses to position themselves as holistic service providers.

China’s burgeoning second-hand car market presents yet another promising opportunity for the car parts sector. As more consumers opt for used cars, the demand for spare parts to maintain and repair these vehicles is expected to surge. This shift creates an ideal environment for businesses to offer cost-effective and reliable solutions to cater to the growing number of second-hand car owners.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post How big is China’s market for car parts? appeared first on Focus - China Britain Business Council.

The global automotive landscape has witnessed dramatic changes over the past few decades, and nowhere is this more evident than in China. The country’s unprecedented economic growth has not only transformed its urban landscape but also revolutionised how its citizens engage with mobility. This transformation has set the stage for a vibrant second-hand car market that is growing at an astonishing pace.

China’s second-hand car market is characterised by a remarkably low average age of vehicles. This phenomenon can be directly attributed to the swift economic progress the nation has witnessed. To put this into perspective, back in 2000, there were a mere 4 million vehicles on Chinese roads. Fast forward to 2023, and this number has ballooned to an astounding 320 million. This exponential growth in private vehicle ownership has naturally contributed to a dynamic second-hand car market.

The vitality of China’s second-hand car market is further demonstrated by its impressive economic figures. The market is estimated to be worth RMB 400 billion (£44 billion), and the China Association of Automobile Manufacturers estimates that the annual value of the market will reach RMB 750 billion RMB (£81 billion) by 2028. This figure underscores the market’s significant economic impact and its indispensable role within the broader automotive industry.

“With such a young market for private car ownership, the second-hand car market in China is really at the very early stage of its development,” says David Gregory, China Market Business Advisor, CBBC. “As this sector of the market matures, it will not just effect the pure retail side of the automotive business, but also create ever greater opportunities in other areas such as spare parts and maintenance.”

Prominent brands such as Geely, Chery and BYD have already begun to establish dedicated divisions for selling certified pre-owned vehicles. Such a move not only allows these companies to tap into a burgeoning market, but also to capitalise on their well-established brand reputation and quality assurance practices. This approach is highly attractive to buyers seeking reliable used cars.

In tandem with this surge in interest, the digital era has brought about transformative changes to how consumers engage with the second-hand car market in China. An array of online platforms have emerged, facilitating the seamless purchase of second-hand cars. Websites like Guazi.com, Uxin and Renrenche have developed a reputation as trustworthy platforms where potential buyers can explore an extensive range of options and make informed decisions.

The impact of these online platforms goes beyond just providing consumers with more options. They have also introduced a new level of transparency to the market by providing comprehensive information about a vehicle’s history, condition and price. These platforms can also offer supplementary services such as rigorous inspections, certifications and flexible financing options, which, when combined together, render the buying process much smoother and more convenient for buyers.

The main factor driving the growth of the second-hand car market remains cost efficiency. The cost of new cars in China can be surprisingly high due to associated taxes and additional expenses. Acquiring a second-hand car presents a viable avenue for young buyers to own a vehicle at a fraction of the cost of a new one. That being said, the allure of the second-hand car market in China does extend beyond economic motivations. Young people in particular are exhibiting a growing inclination towards exploring this option due to environmental concerns, as a second-hand car may represent a more sustainable option than buying a new car.

Moreover, many young buyers are actively seeking out used electric vehicles (EVs). This stems from the fact that used EVs tend to be more affordable than their new counterparts due to government subsidies, aligning with both economic considerations and environmental concerns. This move also provides young buyers with access to cutting-edge technology at a substantially lower cost.

Automakers, recognising this potential, are strategically venturing into the sector. Nevertheless, there are many key factors that need to be taken into account if the market is to succeed long term, as Owen Edwards, Head of Downstream Automotive Consulting at Grant Thornton, emphasises: “Any used vehicle market requires fully structured processes for sourcing, storing and refurbishing, moving vehicles to the sales point and then selling the vehicle. Without efficient processes in place, growth in the used car market could slow over time as vehicle stocks increase and costs rise,” he says. “Moreover, as used car and vehicle financing markets mature, Chinese original equipment manufacturers (OEMs) should consider selling parts into the used car market. As China’s vehicle finance market develops, it will create opportunities to upsell used car finance and, in order to capture this potential market, OEMs will need to move early.”

Moreover, the increasing preference for second-hand cars among young buyers, driven by cost-efficiency and environmental considerations, adds an intriguing dimension to an evolving landscape, as does the ways online platforms are changing how buyers engage with the market. As China’s second-hand car market continues to develop, it will not only present economic opportunities, but also align with the shifting priorities of the country’s dynamic population.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will include a focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

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Sales of China’s so-called new energy vehicles (NEVs) more than doubled between November and December of 2021. According to the China Passenger Car Association (CPCA), full-year deliveries reached a record 2.99 million units, representing 14.8% of new car sales. 

The Chinese government forecasts that by 2035, EVs are expected to account for 50% of all new car sales. Although China could face some hurdles in achieving this target, the country is already well ahead of its government’s forecast to reach a 20% nationwide penetration rate by 2025. Further, it is hoped that by 2030, three in five new cars on China’s roads will be powered by electricity instead of fossil fuels.

As a result, China’s EV market is hyper-competitive. Tesla may still dominate at present, but there are an increasing number of popular home-grown brands. The combined sales of Chinese brands NIO, Xpeng and Li Auto are estimated to have reached around 280,075. Although this is still 13% less than Tesla, whose 2021 deliveries more than doubled to 321,000 units, these domestic brands are quickly developing aggressive new expansion models. 

“In general, there is a notable preference for international brands of passenger vehicles in China, with 62% of consumers choosing an international option,” David Gregory, China Business Advisor at CBBC, told FOCUS. “However, there is a striking contrast within the EV market where nine of the top ten manufacturers are domestic companies, including SAIC, BYD and GAC Group.” Gregory added that a number of Chinese companies that concentrate solely on producing EVs are emerging, suggesting that China will continue to lead the way not only in terms of market size but also in the development of the EV industry.

“EV brands that make it in China will be well prepared for sale in other parts of the world. The quality of Chinese cars including EVs is, compared to a few years ago, at an extremely high level,” explains Thomas Engel, product launch manager at Volkswagen Anhui.

What new government support is available for EVs in China?

One of the key factors driving the EV market is the slew of local and central government incentives. NEV subsidies were introduced in 2009 to help prominent Chinese EV companies such as NIO and Xpeng to grow quickly. Subsidies not only aided the development of the companies themselves; they also made EVs more affordable for consumers.

However Professor Kent Deng of LSE believes the subsidies are falling out of fashion: “The government provided blanket subsidies to encourage investment in and consumer demand for electric cars over the past 10 years. But the subsidies are on the decline, cut by 30% last year.”

Instead of direct subsidies, China has turned to a market-based approach. In 2017, the government introduced a new policy that asks automakers to trade ‘New Energy Vehicle’ credits. These credits are similar to a reward-based system, whereby for each EV that is produced, carmakers receive positive credits (and vice versa). The scheme is designed to further strengthen China’s growth in the global automobile industry. In addition, the government is hoping to wean carmakers off rebates to foster survival of the fittest in the overcrowded marketplace.

In 2020, the government announced a new policy that called for mandatory emission quotas for internal combustion engines (ICE). China is determined to ensure EV manufacturers are fit for purpose, with the ultimate goal of phasing out ICEs. The impact of these policies remains to be seen, as the reduction in subsidies will inevitably translate to higher consumer prices. Nevertheless, the government is confident that slashing subsidies will have a minimal impact on NEV sales in 2022, which are hoped to reach an estimated 6 million units. 

What challenges are facing the EV market in China?

Beijing’s efforts to encourage the purchase of greener vehicles have certainly paid off. Today’s consumers are more willing to purchase an EV, yet they still face some practical drawbacks. 

One main drawback is the lack of charging points. Some Chinese consumers have held back from buying a pure-electric car as they are concerned by the inadequate number of charging facilities. Although boasting the world’s largest charging network for EVs with an average of one charging station for every three EV cars, China has not yet reached its ideal ratio of one car to one charger. Indeed, during national holidays, some consumers have faced queues of up to four hours to charge their vehicle on motorways where charging facilities are stretched to the limit. 

“Very often, the sale of EVs is connected to the availability of charging infrastructure. And yes, [in China], this can be improved. But once customers make the step from combustible engine cars to EVs, they adjust quite fast and find ways to charge their cars,” says VW’s Engel.

In older neighbourhoods, one of the main challenges is installing charging circuits, as the buildings cannot take large power loads. In addition, many rural areas lack the infrastructure for EVs. Charging points are mainly concentrated in central business districts in top-tier cities, where the commercial returns of running charging units are much higher. The use of EV cars in rural areas is still significantly less than in major urban cities and one of the main questions that needs to be addressed is how to incentivise station owners to invest in ‘low utility’ areas.

Engel hopes that “car batteries become more and more bi-directional. In case of a temporary power loss in a rural area, I see an advantage in being able to use the energy from a car for a house.”

Inside an Xpeng, a popular Chinese electric car brand

In order to further address this issue, the government is requiring all new residential buildings to install charging posts in parking spaces. Policymakers have also launched a New Energy Development Plan and a Technology Roadmap 2.0 to further support the construction of the required infrastructure. 

Another challenge is high price sensitivity. China is aiming to scale back price support for consumers because of the improving costs of battery technology. However, there is currently an acute global shortage of key battery components such as lithium, leading to worries about a huge negative impact on the EV market. 

Fortunately, China has been investing in battery recycling technologies, and it is hoped this will help to avert supply shortages. Indeed, if battery prices continue to decline in the next five years, EVs could achieve price parity with ICE. 

What targets is China’s EV market working towards in future?

At the macro level, the upward momentum of the use of EV cars is helping China to achieve its climate change goals. 

“Seventy-two percent of China’s oil use currently depends on foreign imports. So the government has a desire to cut its oil intake to save hard currency,” asserts Professor Deng.  “The promotion of electric cars seems, to a great extent, to be able to foot the bill,” he adds. “The government is also committed to reducing greenhouse gases. The promotion of electric cars now kills two birds with one stone.”

China hopes to cut carbon dioxide emissions to near zero by 2060. With the growth of the EV market, the outlook on the government’s aims and objectives is positive. Another factor underpinning the government’s support for EVs is that it will help to reduce air pollution and reduce carbon emissions. Furthermore, the use of EVs will strengthen China’s technological progress and economy, especially as more European countries look to China to supply their new energy vehicles.  

Over the next decade, there is no doubt that EVs are going to become increasingly dominant, but Deng says that “China still has a long way to go — in 2020 China had 281 million cars on road, only 5 million were electric ones, or 1.8%.” As new rules and policies slowly come into effect, it will be worth re-evaluating the EV market as it continues to surpass expectations. 

If you are a British company in the electric vehicle industry, call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner to support your growth in China. 

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China is the world’s top automotive market, with 25.8 million new vehicles sold in 2019 versus 17 million in the United States. Private car ownership in China stood at 207 million in 2019 compared to just 3.7 million in 2000, the year that China entered the World Trade Organisation. In the same period, private car ownership per 1,000 capita surged from just 3 to 148. Although these increases have been substantial, there is still huge potential in China’s car industry, since the ownership rate is still comparatively low compared to the US or countries in Europe.

From the perspective of UK original equipment manufacturers (OEMs), China continues to be the main international growth driver. For example, China is the largest market for Jaguar Land Rover, which sold 146,399 cars in the country in 2017 – more than was sold in the whole European Union market. China will continue to be a growth engine for UK brands, and tier two and three UK suppliers should be aware of China’s growth areas to ensure they’re aligned and bringing value within the wider supply chain in order to be part of the overall growth story.

China has targeted developments in specific parts of the automotive sector as a key part of its industrial strategy, Made in China 2025. This includes new energy vehicles (NEVs) and intelligent and connected vehicles. To tap into China’s auto market, UK companies can make use of major local industry events as first-step market entry opportunities.

Brands can attend auto-related exhibitions, trade shows or forums to showcase their products and pitch to potential Chinese clients. For example, China EV100 Forum 2021, which was held on 15 January this year, is a major online forum in the NEV sector. More than 200 VIP guests joined the next-generation vehicle event, including those from governments, associations, research institutes and companies. As automakers and supply chain manufacturers aspire to produce better quality vehicles and components, Testing Expo China 2021 in September 2021 is another event to be considered. Automechanika Shanghai will also take place in November 2021.

Click here to read the report in full

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