Helping Chinese exports conquer the global market
Up to now, most vehicles produced by European carmakers in China were for the Chinese market. Now these companies are visibly shifting to production for export. This will be at the direct expense of European suppliers and production sites. As they develop vehicles using emerging technologies, Chinese tech firms will increasingly be able to export their standards providing them with royalty payments, but also a greater say in future technology development.
Take BMW again – together with its partner Great Wall Motors it founded a new JV in 2018, Spotlight Automotive Limited. Spotlight’s plant in Jiangsu province, with more than 3,000 Chinese employees, will produce the new E-Mini, the iconic British brand, for global markets from 2022. For now, at least, the traditional English brand will also continue to be manufactured in Oxford. For how long is uncertain. BMW recently announced that it would have to let go 400 staff from its British plant – that’s 10 percent of the total.
As for BMW’s JV with Brilliance Auto, which recently produced the iX3, the signs are all pointing to a bright future. In 2018, BMW pledged an additional EUR 3 billion, increasing its ownership share to 75 percent and extending the JV contract to 2040. The German carmaker is also investing in the development of fast-charging technologies together with state-owned State Grid Service EV. The plan is to provide over 270,000 charging piles by the end of 2020. Handy timing, as the new NEV 2020-2035 plan lays focus on these fast-charging facilities to increase the attractiveness of EVs. Above all else, the two partners want to jointly promote their charging technology standards globally.
Too good to be true
For European carmakers, researching new EV and AV technology is indispensable. From a business perspective, relocating R&D to China also seems like a reasonable choice. After all, China’s economic growth in the years to come will ensure high demand and Beijing is keen to support R&D investment in China. However, European carmakers are becoming more reliant on China not only for profits but also for their capacity for innovation. While it is unlikely that Beijing will shut European carmakers out, China’s leadership, ultimately, wants to build stronger Chinese competitors and dominate technological standards. For Beijing, welcoming European carmakers is mostly a means to an end.