Industry landscape reflection after test drive, battlefields are gathering.

Author | Huang Shan

Editor | Zhu Shiyun

The law of the jungle is the most fundamental rule of the world, survival of the fittest.

In “The Three-Body Problem”, “Destroying you has nothing to do with me.” best describes it, this is also true in the business world.

Why am I starting like this? Because it’s my reflection after test driving the Dongfeng Nissan Ariya a few days ago.

After the test drive, besides my impression of the vehicle, I spent more time thinking about the upcoming intense collision and battle between traditional and new emerging brands. What makes them stand out? Is it really winner takes all?

The development speed of new energy vehicles in recent years is obvious to all, especially with the emergence of new players, propelling the transformation of the industry in terms of market, products, services, and more. This has also led to increased recognition and purchases of new energy vehicles from consumers.

In recent years, new emerging brands have indeed taken the lead in terms of marketing campaigns, creating an atmosphere that only new emerging brands are worth considering when purchasing new energy vehicles. Traditional brands have been caught off guard, feeling they do not measure up and cannot keep up.

As a result, many opinions have started to criticize traditional brands, especially international ones, while praising new emerging brands.

But a few questions must be asked:

  1. Will traditional automotive brands sit idly by on the new energy race track?

  2. Are new emerging brands capable of easily overturning and defeating them?

  3. Will international automotive brands give up on the Chinese market?

I believe the answer is a resounding no, and the counterattack has already begun.

If the establishment and rise of new emerging brands since 2014 is an attack on traditional brands, then the first wave of counterattacks came from domestic independent brands, especially BYD, GAC, Geely, Great Wall, etc., which have begun to make strong moves in the last two years.

The second wave of counterattacks comes from international brands. After playing around with some experimental products, they have begun increasing product supply in the coming years, such as Volkswagen’s ID series, Mercedes-Benz’s EQ series, BMW’s i series, etc.

This includes Japanese brands that have long been overlooked. Toyota’s new model bz4X has been delayed, Honda’s e:NP is currently on tour, and Nissan’s Ariya, which was two years late, will be launched this month.

Next, new emerging brands, domestic independent brands, and international brands will converge further, intertwine with each other, and engage in fierce competition, each with their own strengths.

“Three Electric” is fundamental, don’t just focus on “surface level” details

First and foremost, buying a car is for driving. The driving experience depends on the performance of “battery, electric motor, and electric control”.

Many domestic brands often advertise their acceleration rate in seconds per hundred kilometers, which is not surprising, as fast acceleration is an inherent characteristic of electric vehicles.

Or, the performance of “three electric” is skated over in a few pages of PPT, ignoring these fundamental abilities, and focusing more on perceived “surface level” features, such as intelligence, cabin, audio, and screen.

Although the Ariya is two years late from its initial release to now.However, it must be said that Ariya is a car that’s enjoyable to drive because, as an international brand of Nissan, it has a strong research and development background and has fine-tuned the entire car, providing both a sense of unity and remarkable handling. The driver can master the car’s acceleration, turning, and braking with ease.

Ariya is the first model developed based on Nissan’s new electric platform, “Alliance”, and the company’s “three electric vehicle” capabilities are beyond doubt. After all, Nissan’s previous generation of electric cars, the LEAF, has proven its worth. As of February 2022, LEAF has sold 583,000 units, won the global sales crown for eight consecutive years, and has accumulated 21 billion miles with zero battery safety accidents.

“On the Ariya, Nissan’s self-developed electrically-excited synchronous motor is installed, which is currently only used globally by Nissan and BMW.”

Most vehicles on the market now either use permanent magnet synchronous motors or asynchronous motors, each with its own advantages but also some disadvantages.

Permanent magnet synchronous motors have high power density, good speed regulation performance, small size and light weight. However, they have low efficiency at high speeds and the risk of demagnetization at high temperatures. They are also expensive and generally used in small and medium-sized vehicles for urban driving purposes.

Asynchronous motors have a wide speed range and good high-speed performance, with low cost. However, they are large in size, heavy in weight, and have high energy consumption, and are mostly installed in performance vehicles.

The electrically-excited synchronous motor adjusts the amount of electricity in the motor’s excitation coil, balancing efficiency and performance.

In addition, the self-developed electric control technology can achieve ultra-high-precision torque control in 1/10000 second, providing a smooth driving experience.

Although the battery is also purchased from CATL, the battery’s entire design, safety protection, and production standards are defined by Nissan. The original platform could accommodate more batteries, but for safety redundancy, Ariya only carries a 90-degree electric battery.

Some may argue that the “three electric vehicle” system seems to be falling behind the trend, but one must consider that new brands lack the foundation and strength that Nissan possesses. Achieving this takes time, talent cultivation, and system inheritance.

However, new brands also know that these parts are readily available, and they can make a car that scores 70-80 points when assembled. Moreover, as it’s not easily perceived by customers, they’d rather invest in big screens, voice assistance, and intelligent driving to look cool.

Nevertheless, the “three electric vehicle” system is still vital, and new brands should prioritize the underlying research and development.

Regardless of old or new, they are moving towards the same direction.### Translation

For a newcomer in the automotive industry, how can they quickly acquire users? Differentiation is a shortcut they choose.

They create an impressive appearance, pile on all the materials, elevate the parameters, set an affordable price and move onto various internet applications. Through superior user experience, top-notch services, appealing words, channels and experiences, they strive to transform cars into electronic products.

It is time for Chinese smartphone brands to launch a counterattack against international big brands in the automotive industry.

New forces are following a similar path and collectively prove that this choice is the right one. Traditional brands, on the other hand, remain stagnant on the scoreboard by not taking action. New forces have straightaway resonated with users and earned market recognition.

People tend to love novelty and hate routine.

When traditional brands eventually realize this, new forces will be knocking on their doors. It is the freshness, new experience and modern functions that new forces bring, which traditional brands cannot provide or are not proficient in.

Nowadays, new forces are leading in sales and customer feedback, while traditional brands are starting to reflect, change and launch counterattacks.

In my opinion, both sides have their advantages and disadvantages while they are covering the gap and gradually moving towards the same direction.

Firstly, learn from each other and make up for the differences

Large-scale and standardized production is one of the core capabilities of automotive enterprises. With decades or even centuries of car-making experience, traditional brands have great advantages over mass production, processes, quality control, inspections, supply chain management, network channels and so on. This represents years of systematic construction and organizational capabilities. This is also the biggest challenge faced by new forces.

Now, top new forces are starting to cross the 100,000 annual production threshold. But having advanced machines and production lines, and several talented people is not enough. It is essential to establish a systematic capability with standardized processes that must be strictly followed.

For example, one of my friends was one of the first owners of NIO ET7, but his car had been repaired four times in two months for various minor problems. This problem lies in the production and quality control link.

On the other hand, the ability to narrow the distance between users, grasp user needs accurately, optimize product experience, innovate sales models, and improve vehicle intelligence levels are all within the new forces’ capabilities circle.

Therefore, traditional brands are also learning from new forces’ strategies, setting up direct sales channels, developing in-car systems, implementing auxiliary driving, and so on.

Expanding their strengths, learning from the advanced experience, and making up for their shortcomings, new forces and traditional brands are entering each other’s capability circles.

This kind of competition is a positive, meaningful one.

Secondly, returning to the basics and reserving the capabilities

Making cars is also a technology and experience-intensive industry. Safety is the bottom line, followed by the drivability and functionality, while the configurational richness is the last priority.

It is clear that currently, domestic electric cars perform better in natural environments than international brands. Therefore, no matter how big the screen is or how intelligent the system is, security is always the priority.

All of these capabilities come from the accumulation of basic R&D capabilities and respect for technology, which require long-term accumulation.# Chinese Brands’ Autonomous Development

Nowadays, most of the autonomous development of Chinese automotive brands is focused on intelligentization. I agree that this is the future trend and our user experience is better than international brands. However, for basic capabilities such as materials, structures, processes, and manufacturing, including independent control of core components, they are all basic abilities that an enterprise needs to possess for long-term survival.

Otherwise, we can only be an automotive power rather than an automotive powerhouse, which is a typical example of being trapped by chip shortages.

Fortunately, many Chinese automakers have also started autonomous development of chips, batteries, motors, and electronic control. Foreign brands are also strengthening their research and development capabilities in areas such as intelligentization and autonomous driving.

Globalization and Localization

The market for new energy vehicles is not only in China but also a global market. International brands come in, and Chinese brands must also go out.

New opportunities exist for Chinese brands in the new energy vehicle market abroad.

International brands are already implementing global strategies, setting and participating in rules, aiming at the global market when developing and producing a new car, like Nissan’s Ariya, which was first launched in Japan and will be available in China, Europe, and North America. Volkswagen’s ID series is sold worldwide.

Years of accumulation of globalization have enabled them to seamlessly connect directly.

But their disadvantage lies in localization, as Chinese teams have the power of speech, the ability to redefine products, and the influence on headquarters’ strategies, especially product iteration speed.

China, on the other hand, has almost the world’s most comprehensive new energy vehicle industry chain. Not only is it large but the product capabilities are also not weak. Leading companies exist in various fields, which is something that no other country has.

Especially under the influence of the pandemic, we have stable production capacity and price advantages. However, we lack global strategic layout, have limited knowledge of regulations and market awareness in various regions, and lack international and local teams. This is a new challenge for us, but it is also a new opportunity.

The most important thing is whether Chinese brands have the determination to impact overseas markets.

Fortunately, we have already seen some Chinese brands competing head-to-head in overseas markets with international brands. For example, NIO entered Europe, BYD entered Japan, and SAIC’s MG MULAN was prioritized in overseas markets.

Therefore, foreign brands need to do localization, and we need to do globalization.

Conclusion

In my opinion, new energy vehicles will not completely become electronic products because it includes multiple attributes such as mobile tools, identity tags, and energy terminals.

The new energy vehicle market is not a winner-takes-all market; demand is diverse, and users are segmented, but it follows the law of the jungle of survival of the fittest.

New and old forces are learning, permeating, and entering each other’s ability ranges.

Although new forces showed off for a few years, what comes next is a battle of wits. Independent brands and international brands will not be soft, and we do not need to wait until 2025 for the decisive battle because war is happening all the time.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.