A car owner is using a charging pile to charge an electric vehicle in Dukou village, Yantai, China.
Ni Tao is IE’s columnist, giving exclusive insight into China’s technology and engineering ecosystem. His Inside China column explores the issues that shape discussions and understanding about Chinese innovation, providing fresh perspectives not found elsewhere.
The competition in China’s new energy vehicle (NEV) market is nothing short of a fierce battle, replete with brutalities and sometimes low blows.
On one front, manufacturers are locked in a relentless price war, while on the other, the pace of innovation is staggering.
New applications and upgrades are being launched at a pace that leaves the market struggling to keep up. Falling behind, even briefly, could spell the end for a company.
International media often attribute China’s rapid rise in NEVs to cost-effectiveness, generous government subsidies, or even labor exploitation.
This narrative suggests that without these factors, the market share of Chinese NEVs wouldn’t have surged within a short period.
However, this viewpoint is overly simplistic. China’s NEVs’ ascent is far more complex than the mere product of policy support or cost-cutting measures.
Wise industrial policies did help set the stage for the industry’s takeoff, but this is not the sole determinant. Individual carmakers like BYD or Tesla are not decisive enough to lift the whole sector’s value chain.
Even today, with substantial cuts in government subsidies to end-consumers, China’s NEV market remains vibrant despite economic woes and consumption downgrade.
So, how do we account for this success? At the heart of it, I believe, is a deeper, more significant shift: A supply chain revolution.
China’s NEV industry is now characterized by increasing openness, flexibility, and innovation, which allows new players to enter the automotive supply chain and make their mark.
Many suppliers that previously held no place in the supply chain can now pilot new technologies, secure mass production orders, and get their products into vehicles. The result is a flourishing ecosystem where innovation thrives.
Critics often mock Chinese-made NEVs for their seemingly excessive features, deriding them as carriers of “refrigerators, TVs and big sofas.”
Their point is that luxurious interiors and comfort designs are overly flashy and deviate from what a car is supposed to do.
Even worse, some critics suspect that interior upgrades come at the expense of sacrifices in hidden corners of the vehicle.
Yet, contrary to skeptics, these so-called deviations might be what today’s consumers seek.
In Chinese automakers’ product definitions, cars are no longer just commuting tools responsible for safely transporting people from point A to point B.
Instead, they have become a digital mobile space. For millions of Chinese families, a car’s interior is an extension of their living rooms and a new place to experience human-machine interaction.
“People just want to bring comfortable things into this environment. The underlying drive is that users crave more comfort, convenience, and pleasure,” says Yu Xin, Vice President of Appotronics, a Chinese company specializing in laser projection technologies. “This is an unchanging pursuit.”
Appotronics is a typical new entrant into China’s sprawling automotive supply chain. Previously a developer of laser projection products for homes and cinemas, the Shenzhen-based company took a bold step into the automotive parts industry about three years ago.
Their in-car projection screens can now be found in models from AITO, a new car brand backed by Huawei, and state-owned Beijing Automotive Group.
According to Yu, with a vocal instruction or a few taps on one’s smartphone or the in-vehicle infotainment system, a large white screen will drop down in front of passengers sitting in the back seat, turning the vehicle into a mobile cinema.
Yu explained that Appotronics’ laser projection combines physical and virtual displays, making it a growing variety of emerging technologies that can meet the rigorous standards of automotive-grade products in China.
Being automotive-grade means that car parts suppliers must comply with strict technical requirements, including the ability to operate within extreme temperature ranges of -40 to 85 degrees Celsius and withstand constant vibrations.
For a company like Appotronics, which started in consumer electronics, entering this highly demanding field is a testament to the many opportunities China’s automotive supply chain revolution has brought about.
Before this revolution, the country had only one major opportunity to reshape its automotive parts sector, letting in newcomers and phasing out laggards. During this period a wave of local suppliers were allowed into the automaking business to substitute imports with homegrown technologies.
Beyond that, the traditional supply chain was almost closed to new players due to a stringent emphasis on system compatibility and risks associated with introducing new suppliers into OEMs’ production processes.
“But for us, our technological innovation aligns with their emerging needs,” Yu stated proudly. Today, Appotronics is the leader in automotive laser projection in China, a position it has attained within three years. In comparison, the adoption cycle for new technologies among legacy automakers is usually eight years.
Overseas giants like BMW, Volkswagen, and Toyota tend to adhere to their car-making concepts. These include a time-consuming protocol for validating promising technologies, usually lasting eight years from their emergence to mass deployment in vehicles.
By contrast, the timeline for new car parts to enter China’s supply chain has been considerably accelerated, sometimes to under three years.
This has inevitably raised concerns. Market watchers question whether shortening the development and validation periods could compromise quality or contribute to “cutting corners.”
This concern is valid, as consumers wonder if they would become guinea pigs for unreliable “automotive-grade” products.
Yu, however, dismissed these fears. He said that even with compressed timelines, there is no evidence that quality control requirements are being lowered to advance commercialization.
“All key metrics, such as customer complaint rates, repair rates, and data traceability, are the same as those for products developed over five years—the standards haven’t suffered at all,” he says. “This is something that may only be possible in China’s environment, which I call the ‘China speed.’”
In addition to openness, inclusiveness, and innovation, another hallmark of China’s NEV domain is its growing resemblance to consumer electronics.
Notably, technologies that once prospered in the Internet and consumer electronics segments are now finding new applications within the automotive sector.
The industry mirrors the rapid iteration cycles seen often in consumer electronics like smartphones. New product releases could come once a year, if not more often.
The accelerated pace of OTA upgrades for intelligent NEVs sets them apart from internal combustion engine vehicles, which can remain in the market in their older versions for as many as eight years.
For overseas competitors, the landscape in the world’s largest car market has shifted to their disadvantage.
To regain market share lost to Chinese rivals, they must first confront their failure to catch up in innovation.
The challenges posed by Chinese NEVs go beyond technology or manufacturing prowess. They seriously question traditional approaches to car-making, supply chain management, and even organizational culture.
When asked how global legacy automakers might respond to these challenges, Yu noted that it’s not easy for large corporations to change direction quickly, just as “it’s tough to turn a big boat around.”
He predicted that a structural overhaul would be necessary. China’s NEV-making upstarts have no burdens and can organize their resources aggressively and efficiently. Large companies, however, have been prevented from proceeding down the same path with comparable fervor and resolve by historical legacies and straitjackets.
German automotive technology giants like Bosch and Continental—so-called Tier 1 suppliers—are already struggling in the Chinese market, ceding ground to the likes of Huawei ADS as slow decision-making and conservatism encumber their attempts to fight back.
To fundamentally change their fortunes, “you need very strong leadership to drive change. Otherwise, it’s very difficult for them [to initiate an organizational overhaul],” Yu concluded.
As China’s NEV space continues to evolve, it’s clear that the competition is more than just a race for market share.
Soon enough, the world will see that it’s a battle for the future of the automotive industry itself. If Chinese companies like Appotronics have anything to offer, speed, flexibility, and innovation are the keys to victory in this high-stakes race.
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Ni Tao Ni Tao worked with state-owned Chinese media for over a decade before he decided to quit and venture down the rabbit hole of mass communication and part-time teaching. Toward the end of his stint as a journalist, he developed a keen interest in China's booming tech ecosystem. Since then, he has been an avid follower of news from sectors like robotics, AI, autonomous driving, intelligent hardware, and eVTOL. When he's not writing, you can expect him to be on his beloved Yanagisawa saxophones, trying to play some jazz riffs, often in vain and occasionally against the protests of an angry neighbor.
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