The Japanese Are Feeling the Heat!
Just a while ago, the CEO of Sony Motors publicly criticized: Chinese electric cars lack technological prowess, only focusing on flashy screens.
Another heavyweight, Akio Toyoda of Toyota, made headlines a few years back by stating: More electric cars mean more carbon dioxide.
These statements from Japan's automotive giants reek of arrogance, tinged with a hint of panic.
Over a century ago, carriage drivers exhibited a similar arrogance.
In the streets of London, as cars first appeared, they mocked the roaring, smoke-spewing contraptions passing by, saying:
"A vehicle without the sound of hoofbeats isn't a real carriage!"
Yet, within a mere decade, they were rendered obsolete by history.
Beneath the bravado of Japan's automotive titans lies an undeniable fear of the new.
The year 2023, in particular, was cruel and eye-opening for Japan's auto industry.
Since surpassing the United States and claiming the top spot in the world in the 1980s, the automotive industry has been the cornerstone of Japan's economy, a source of national pride.
But in 2023, this glory was challenged head-on by the Chinese.
According to data, in that year, China's car exports reached 4.91 million units, surpassing Japan to become the world's largest car exporter for the first time.
At first glance, our export figures seem to exceed Japan's by less than 500,000 units, but the alarming factor is the growth trend.
From 2008 to 2020, China's car exports hovered between 500,000 to 1 million units annually. However, starting from 2021, they skyrocketed, growing nearly fivefold in three years!
The following graph vividly depicts the chilling reality faced by competitors.
Since 2021, China's automobile exports have been skyrocketing, surpassing the traditional automotive powerhouses of South Korea, Germany, and Japan like a hot knife through butter.
2021 also marked the beginning of a massive surge in electric vehicles.
The incredible rise of China's automotive industry over the past three years has been largely propelled by electric vehicles.
Even more astounding than the sales growth is China's control over the electric vehicle supply chain.
Data from the International Energy Agency (IEA) reveals that China holds absolute dominance over the electric vehicle supply chain.
In the following chart, the red bars represent China, illustrating its significant advantages across the entire electric vehicle supply chain, from raw materials to lithium batteries and complete vehicle production.
Especially, China produces over three-quarters of the world's lithium batteries, which are crucial components for electric vehicles.
This robust industrial chain provides fertile ground for the technological development of electric vehicles in China.
Over the past three years of the pandemic, industrial exchanges among countries experienced a brief interruption. It wasn't until 2023 when things returned to order that automotive giants in Europe and the United States suddenly realized:
The Chinese automakers they once underestimated have undergone a remarkable transformation!
In 2023, at the Shanghai Auto Show, the sight of Japanese automaker representatives kneeling on the ground, measuring the dimensions of a Hongqi car with a tape measure, left many people speechless.
Just a decade ago, we were still looking up to Western automakers.
Back then, although China's automotive industry had been developing for decades, it still struggled to break through the Western technological barriers in traditional fuel-powered cars such as engines and transmissions.
In just ten years, the situation has drastically changed, and Chinese automakers have become the subject of study for the West.
Since German engineer Karl Benz manufactured the first car in 1885, the global automotive industry has seen numerous ups and downs, experiencing countless shifts in power.
However, a dramatic reversal like what's happening in the Chinese automotive industry within such a short time is perhaps unprecedented.
02 No miracles, just ten years of hard work
Any miracle, apparent in a moment, is actually the result of ten, or even several decades, of continuous efforts.
Those who cannot see clearly often think that miracles happen in an instant, exhibiting a habitual short-term thinking.
At the beginning of 2024, as the Qianjie Automotive soared, some self-media outlets anxiously wrote an article, calculating a sum for Sailese:
After partnering with Huawei for five years, Sailese has suffered losses of 15 billion CNY...
While this may seem like a plea for Sailese, it's actually a questioning of China's electric vehicle burning cash model. Yet, they forget completely that:
Tesla, before turning a profit in 2020, had been in continuous losses for 17 years! During that time, Musk struggled on the brink of bankruptcy several times.
To wear the crown, one must bear its weight.
The development of global industrial chains, especially in heavy asset industries like automotive and semiconductors, has always been a bloody battle rather than a dinner invitation.
Focusing solely on short-term profits while ignoring time and upfront costs is clearly the greatest misunderstanding of the industry.
Before turning a profit for the first time, Samsung Semiconductor experienced 13 years of losses, during which it nearly lost all its equity capital.
Later, through two suicidal counter-cyclical investments in the 1990s and early 21st century, they defeated their competitors and ascended to the world throne.
Similarly, the rise of China's photovoltaic industry over the past 20 years has also experienced countless brutal industry cycles, price slaughters, and losses before emerging as the world's number one.
Before becoming a hallmark of Chinese manufacturing, high-speed rail was also once questioned by many due to its large investments and losses. Today, everyone enjoys the convenience and efficiency of high-speed rail, and no one debates this topic anymore.
Like photovoltaics and high-speed rail, the rise of China's electric vehicles is not the result of a day's work but a farsighted and long-term strategic endeavor.
As early as 1992, the renowned scientist Qian Xuesen proposed forward-thinking advice to the country:
Skip gasoline and diesel, and directly develop electric cars!
This suggestion, for the then fledgling Chinese automotive industry, was indeed way ahead of its time.
And precisely because of that, it took several years for it to materialize into concrete action. The rise of electric vehicles in China was systematically outlined by the US MIT Technology Review.
According to this article, the Chinese government's strong push for the electric vehicle industry stemmed from a consensus:
In terms of internal combustion engine innovation, China could never surpass traditional car manufacturers from the US, Germany, and Japan.
In 2001, the Chinese government took measures to invest in relevant technologies. Electric vehicles were included in the Five-Year Plan and the major scientific and technological projects under the "863 Program."
Six years later, in 2007, Wan Gang, an automotive engineer who had worked at Audi in Germany for ten years, was appointed as Minister of Science and Technology, pressing the accelerator for China's electric vehicles.
Starting from 2009, the Chinese government began to provide financial subsidies for the electric vehicle industry.
With strong policy support, the Chinese electric vehicle industry began to take off. First, breakthroughs were made by companies like BYD and CATL in battery and vehicle production.
Then, in 2014, a new wave of carmakers represented by NIO, XPeng, and Li Auto emerged onto the stage of history.
During this time, the Chinese electric vehicle industry faced a lot of skepticism.
In September 2011, at the China Automotive Industry Development Forum, BYD came under heavy criticism, with experts expressing indignation, stating, "The country is so aggressive in developing electric vehicles, and BYD is responsible for this!"
Implicit in this criticism was the notion that BYD had led the automotive industry astray towards electric cars.
Outside the conference hall, criticisms of fraudulent subsidies and massive losses in the electric vehicle sector were also heard incessantly. BYD and the electric vehicle industry were in dire straits at that time.
Recalling this history, BYD founder Wang Chuanfu choked back tears several times.
Despite the hardships and even the fierce struggles along the way, Wang Chuanfu and his industry colleagues persisted and did not give up.
Finally, the explosion of electric vehicles arrived in 2023.
Today, BYD has risen to become one of the top ten global car manufacturers, raking in huge profits. As a representative of the new car-making forces, Li Auto has also achieved profitability for the first time.
Even the once-mocked Sai Li Si, which suffered a massive loss of 15 billion CNY over five years, has seen a significant increase in revenue and is about to reach a turning point towards profitability in the first quarter.
The big miracle is just beginning
Although the explosion of electric vehicles in China occurred in 2023, the miracle belonging to it may have just begun.
The electrification of automobiles is only the first half, and intelligence is the ultimate goal of the future.
Just in early February, Huawei's Wankuai officially launched the NCA intelligent driving navigation assistance function that does not rely on high-precision maps and can be used nationwide.
Prior to this, most manufacturers' autonomous driving technology progressed gradually, with limited deployment in a few cities.
Huawei, however, took a leap forward by spearheading the nationwide popularization of autonomous driving technology.
For decades, the Chinese automotive industry worked tirelessly, yet lacked significant influence compared to its European and American counterparts. It wasn't until the emergence of disruptors like BYD, NIO, and Huawei that the landscape began to change.
For traditional automotive companies, the most formidable challenge isn't just the electrification of vehicles but rather the terrifying pace of advancement in autonomous driving technology.
Empowered by AI mega models, autonomous driving technology is advancing by leaps and bounds. According to data disclosed by Huawei's Terminal BG CEO Richard Yu:
Huawei ADS 2.0 is now capable of iterating every five days.
At the Shanghai Auto Show, foreign automakers, after three years of the pandemic, were astonished by the progress made by Chinese automakers. Today, the advancement of the Chinese automotive industry in autonomous driving technology is measured in days.
In fact, even newcomers in electric vehicles like BYD were initially unprepared for such rapid iteration.
Just a year ago, Wang Chuanfu famously remarked, "Autonomous driving is nonsense!"
Yet, a year later, BYD enthusiastically embraced autonomous driving technology, dedicating over 4,000 engineers — arguably the largest autonomous driving R&D team in the industry — and asserting that true intelligence lies in the vehicle's overall intelligence.
While some are racing ahead, others cling to outdated notions.
Not long ago, a traditional automotive executive poured cold water on the domestic new energy vehicle sector, suggesting that foreign brands are still biding their time, waiting for the optimal moment to strike.
Implicit in his words is the idea that once multinational companies take action, with their global resources and market dominance, they will overshadow Chinese automakers.
While this argument isn't baseless, it overlooks a more fundamental point:
Today, competition in the automotive industry is no longer simply about resources and market share but increasingly resembles the consumer electronics industry, where the primary battleground is:
The pace of technological iteration.
In this regard, the new forces in car manufacturing are delivering a significant blow to the old guard.
The remarks of Kenichiro Yoshida, President of Sony Automotive, vividly represent traditional automotive thinking. He once complained publicly:
Chinese electric cars lack technology and only focus on fancy displays.
Ironically, Japanese automakers were among the pioneers in the global electric vehicle industry, with the Nissan Leaf once leading as the world's best-selling electric car.
In the field of autonomous driving, Japanese automakers also possess considerable strength, with numerous technological patents.
However, adhering to traditional gasoline car and manufacturing ideologies ultimately undermined their leading edge in the era of electric vehicles. Until recently, Akio Toyoda, President of Toyota, was still blasting electric cars:
In the future, electric vehicles will at most only occupy 30%, with the remaining market shared by hybrid, hydrogen fuel, and gasoline cars!
Contrary to his claims, in 2023, the penetration rate of new energy vehicles in China reached 31.6%, surpassing 40% in the last two months.
The boat has sailed past countless mountains!
Just recently, the Ministry of Industry and Information Technology, along with several other ministries, officially released the first international standard for autonomous driving test scenarios, signaling a new stage for autonomous driving vehicles in China, represented by L3/L4 automation.
In the first half of the electrification era, Chinese automakers have already achieved a miracle.
Yet, in the second half of intelligence-driven development, the greater miracle of Chinese automakers may be just beginning.
