What does Chinese-style modernization on wheels mean?

With cumulative sales of new energy vehicles in China exceeding 15.8 million and intelligent connected vehicle technology becoming increasingly prevalent, how should new energy vehicle infrastructure development, the commercialization of autonomous driving, and vehicle-road collaboration be promoted? How should China's automotive industry modernization be achieved? What does "Chinese-style modernization on wheels" mean? At the recently held China Electric Vehicle Hundred People Forum (2023), representatives from various fields, including automotive, energy, transportation, urban planning, and communications, discussed these issues, which concern every member of the industry chain and every participant in social transportation.

Despite a price war that began this year, the strong growth of the new energy vehicle market and the disruptive changes across the entire industry chain continue. Statistics show that from January to March this year, the national passenger car market saw cumulative retail sales of 4.261 million units, a year-on-year decrease of 13.4%. Wholesale sales of new energy passenger vehicles reached 1.501 million units in the period, a year-on-year increase of 25.8%. Domestic retail sales also reached 1.313 million units, a year-on-year increase of 22.4%. Some analysts believe that the competitiveness of new energy vehicles continues to improve, and they are now able to compete directly with mainstream traditional fuel vehicles. New energy vehicles will continue to be a key engine for the high-quality development of the automotive industry. "The market is changing daily, and the timetable for full electrification of my country's automobile market is being advanced, and the process is accelerating, even faster than expected. The entire industry must fully anticipate and prepare for this." After analyzing various data and indicators of the first quarter automotive market, Wang Chuanfu, Chairman and President of BYD Co., Ltd., warned that for any company, "there are opportunities within crises and crises within opportunities," and that it is necessary to pay attention to subtle market changes, think calmly, and respond with composure.

Wang Chuanfu stated that the industry is currently experiencing mixed fortunes. The good news is the huge size of my country's auto market, but the worry is the extremely fierce market competition. "At this time, the industry is not about the big fish eating the small fish, but rather the fast fish eating the slow fish." He believes that in this period of major change, companies must have innovative technology, precise strategies, and flexible decision-making; only with these three elements can they survive. At a high-level forum themed "Promoting the Modernization of China's Automotive Industry," Ouyang Minggao, an academician of the Chinese Academy of Sciences and vice chairman of the China Electric Vehicle 100 Forum, stated that the new energy vehicle market is comprehensively squeezing out the fuel vehicle market, putting pressure on the entire fuel vehicle industry chain, and the competition between the two has begun a decisive battle.

Ouyang Minggao stated that the current new energy vehicle industry is characterized by "rapid growth but low profits," while the fuel vehicle industry is characterized by "lack of growth but high profits." He emphasized that while new energy vehicles still cost more than fuel vehicles, their brand, influence, and premium are increasing. The brand premium of joint venture fuel vehicles is declining, and high-quality new energy vehicles can compete with joint venture fuel vehicles on price. "The new energy vehicle market is constantly expanding, with each competing against the other. Competition has entered a stage of positional warfare, and the market has entered a stage of elimination of the fittest." Ouyang Minggao stated that the rapid adoption of new energy vehicles in recent years has also brought pain points such as difficulty charging for users, fluctuations in battery lithium prices, and industrial chain transformation.

Wan Gang, President of the China Association for Science and Technology, concluded that in 2022, China's new energy vehicle market overcame challenges such as rising prices of raw materials such as lithium ore and chip supply, achieving remarkable results. He believes that China's automotive industry has reached a new starting point for modernization, but at the same time, the full market development of new energy vehicles still faces challenges. "China's automotive industry is currently embarking on a new journey of modernization, entering a new stage of comprehensive upgrades towards electrification, intelligence, and low-carbon development. We must leverage our institutional advantages, further improve the cross-departmental coordination mechanism for new energy vehicles, and strengthen top-level design and system deployment to achieve innovation-driven and high-quality development." Wan Gang suggested that low-carbon development is a major trend and direction in the global automotive industry, and that China's new energy vehicle industry should increase its efforts in openness and cooperation to promote the low-carbon transformation of the global automotive industry. "As far as the development of new energy vehicles is concerned, China's leading position is obvious to all," said Meng Xia, CEO of Volkswagen Passenger Cars Brand China and Head of Sales at Volkswagen Group (China). Despite the current short-term slowdown in market demand, Volkswagen is confident in the continued recovery of the Chinese auto market. "In 2022, one in every four new cars sold in China will be a new energy vehicle. This year, that proportion is expected to reach one in every three." After visiting cities such as Shanghai, Hefei, Changchun, Beijing, Haikou, and Guangzhou, Meng Xia witnessed China's impressive pace of innovation through green mobility initiatives.

He believes that, on the one hand, electric mobility has become popular, and the supporting industries are becoming increasingly mature and complete; on the other hand, Chinese consumers are tech-savvy, and advanced connectivity and entertainment features have become basic requirements for new cars. At the sub-forum on the integrated development of green energy and new energy vehicles, Shao Bin, President of BMW (China) Automotive Trading Co., Ltd., stated that China has made outstanding progress in green energy technology and production capacity, especially in the construction of charging infrastructure, green energy conservation, and hydrogen refueling stations, which have entered a fast lane of development. "We very much welcome this development trend, as it is highly consistent with BMW's electrification strategy, hydrogen energy strategy, circular economy, and sustainable development." Shao Bin explained that BMW fully supports China's goal of achieving carbon peak and carbon neutrality. According to the plan, by 2030, BMW aims to reduce the average lifecycle carbon emissions of a single vehicle to 40% compared to 2019 levels. "This goal is challenging because we're focusing on control across the entire value chain. We contribute approximately 20% on the supply chain side, 80% on the production side, and at least 40% on the user side," he said. Currently, BMW's Shenyang production base has achieved 100% green electricity production, including 100% green electricity supply at 37 non-production sites.

In terms of the supply chain, BMW has worked with suppliers to achieve emission reduction targets. Shao Bin said, "Take Liaoning Province as an example. The green electricity share of all our suppliers in the region is already close to 40%. This is a challenging task, but the current results are encouraging." In fact, China's active development of new energy vehicles has not only provided a vast market for domestic and foreign companies, but has also brought ripple effects to various related industries. Zou Ji, CEO and President of Energy Foundation China, emphasized that full electrification is an inevitable choice for high-quality development and pollution and carbon reduction. "If we follow a very conservative electric vehicle development target, my country's oil dependence will be over 70% by 2030, of which 13% could be replaced by electric vehicles. However, given the rapid development of the past two years, the ultimate replacement effect of electric vehicles could far exceed this proportion." At the forum, Zou Ji calculated that, at an oil price of $110 per barrel, new energy vehicles could save at least $50 billion annually in oil imports.

He believes that promoting full electrification in the automotive industry will not only benefit transportation emissions reduction and energy security, but also bring considerable economic benefits and new market opportunities. As Wan Gang summarized, the full market development of new energy vehicles in China faces challenges such as high raw material prices, a sluggish supply chain, technological constraints, and lagging charging and swapping infrastructure. At the forum, Xin Guobin, Vice Minister and Member of the Party Leadership Group of the Ministry of Industry and Information Technology, stated that the rise of anti-globalization and trade protectionism threatens the stability of the global automotive industry chain and supply chain, and undermines international exchange and cooperation. He believes that the automotive industry is inherently international, and new energy vehicles require even greater cross-regional and cross-industry collaboration. "We will continue to uphold the principles of openness, cooperation, and win-win results, foster a market-oriented, law-based, and internationalized business environment, and strengthen exchanges and cooperation with other countries in areas such as new energy vehicle technology innovation, trade and investment, and standards and regulations. We will contribute positively to the modernization of China's automotive industry and inject new impetus into the global economic recovery," said Xin Guobin.

In the second half of the automotive revolution, centered around intelligence, automotive chips and operating systems have become a focus of widespread attention and a key area of international and cross-sector collaboration. After continued commercial progress over the past year, intelligent computing platform provider Horizon Robotics has added international brands such as Volkswagen to its list of partners. Horizon Robotics founder and CEO Yu Kai explained that the company is currently in mass production for over 50 vehicle models and currently has pre-installed chips in over 120. The company has also shipped nearly 3 million automotive-grade autonomous driving chips, including the Journey 5, making it one of the few chips in the industry with over 100 teraflops of computing power and already in mass production. He expressed confidence, "I believe we will collaborate with even more international brands in the future." "In this round of automotive industry transformation, the Chinese market has finally taken a global lead. China is not only the world's largest automobile producer and seller, but has also gained a first-mover advantage in emerging technologies like new energy vehicles and autonomous driving." Cai Zheng, General Manager of the Automotive Business Unit at Texas Instruments (TI) China, told reporters that electrification and intelligentization present unprecedented opportunities for Chinese automakers and open new doors for suppliers like TI. He stated that TI will not only increase its investment in China but will prioritize partnering with the most advanced automotive chip technology in the Chinese market. "In fact, many of our products have already debuted on new vehicles from Chinese companies, something we're very proud of."

Some analysts believe that building a modern industrial system is an inherent requirement for adapting to the new wave of scientific and technological revolution and industrial transformation, and is a key path to building a manufacturing powerhouse and achieving Chinese-style modernization. Given the complexity and diversity of the hardware and software systems involved in future cars, it's beyond the reach of a single industry, requiring cross-sector integration. Therefore, there's reason to believe that once China's new energy vehicle sales and development quality reach new heights this year, the entire industry and consumption structure will inevitably be completely transformed. The requirements of high-quality development and the improved lives brought about by Chinese-style modernization will be first realized in the new energy vehicle industry. (China Youth Daily/China Youth Network reporter Xu Yajie)