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Automotive and New Mobility
Automotive and New Mobility / 20 February 2019
What happens beyond the headlines
For the foreign observer, it is easy to think that Elon Musk is the savior of Electric Vehicles in China; in the West and in the universe anyway. After firing off his Tesla Roadster into space, the focus now is to bless China with the new Model 3. Such is the international media coverage about Tesla’s efforts to ship as many vehicles as possible to the Mainland before the March 2019 deadline (when the tax truce between the US and China is supposed to end) that one wholeheartedly wants to wish for safe passage; otherwise, so the concern, China would be prone to suffer from serious deprivation.
Sure, Tesla must get credit for shaking up an automotive industry too long contented with a stagnant yet profitable business approach and too restrained in its efforts to propose innovations. And indeed, Musk has created a valuable brand that kindles aspiration and incites to dream. But Tesla is going to face strong headwinds in China, even with local production. The Nios, Bytons, and Xpengs have emerged in the recent past and are ready to roll.
And then there are more established Chinese car makers, often accused of being slow in adapting to changes and inferior in performance and quality compared to Western brands. Without fanfares, they sold close to a million New Energy Vehicles to Chinese customers in 2018, contributing over 4 percent of total passenger vehicle sales. Of course, they have heavily benefitted from government support, but still, their role not only in developing new technology but also bringing it to the market must be acknowledged.
One of these car makers to closer look at is GAC Guangzhou Automobile Group (广汽集团). The company made some rare headlines just recently with their announcement of plans to enter the US market. In China, they sell around half a million mainstream cars a year under their brand Trumpchi (传祺).
Largely unnoticed by the public GAC have received an unprecedented endorsement by their Japanese Joint Venture Partners Toyota, Honda, and Mitsubishi. All three car makers have included the EV and PHEV versions of the Trumpchi (传祺) GS4 into their range of vehicles offered to Chinese consumers. What is most notable, though, is the fact that the vehicle will be sold in their respective dealerships with the GAC logo prominently placed on the grille of these vehicles. Only the manufacturer name at the back signals the involvement of either of the Japanese car makers. This means nothing less than that China’s car makers have arrived at eye level with international car brands.
This is just one of these examples that illustrates the potential of Chinese car makers particularly in the area of New Energy Vehicles. We should be happy to have Tesla, but let us also welcome the Chinese players in the game!