CHINA'S CARMAKING CHEERS : MASTER GLOBAL ESSAY

 

IF Fresh Evidence were needed of the importance of China to the global car industry, the Shanghai motor show, which ran on April 18 this year, provided it.

The world's other big jamborees have been permanently cancelled or downgraded, but China's showcase had attracted 1,000 exhibitors from many countries with 100 new models on show.

ONLY a few years ago Chinese cars were poorly designed and shoddily put together. Today they are mostly as good as foreign ones in both respects, and surpass them in the software-driven digital experience that will define car brands in the future.

Yet for the world as a whole, the rise of Chinese cars will be more significant still. To curb global warming, it is essential to replace carbon-spewing petrol powered vehicles with cleaner battery-powered ones.

And China is both the world's biggest market for, and maker of, electric vehicles [EVS].

Vehicles powered by internal combustion have been a great success story over the past century, bringing mobility to the masses and fat profits to the shareholders.

A handful of giant carmakers have made steady improvements to their products and assembled ever more complex supply chains spread across the globe.

This brought greater comfort and safety to passengers, as well as low prices. Competition from Japanese carmakers [ which roared into the fast lane in the 1970s ] and South Korean firms [ which did so in the 1990s ] spurred innovation worldwide.

TODAY the industry, with nearly $3 trillion in annual global revenues, is experiencing its most radical upheaval yet. Established carmakers are scrambling to electrify, improve their software and prepare for autonomous driving.

The disruption is in part a result of TESLA's success, both as a maker of  EVS and as a firm that puts technology at the heart of its business. But it is also caused by greater competition, where local firms supported by state subsidies, are winning market share from Western rivals.

BYD and Changan, the country's two biggest homegrown firms, now have a domestic market share of 18%, and sell around 4 million cars a year.

China's carmakers are especially innovative when it comes to infotainment and the seamless integration of smartphone. A healthy head start and huge scale, meanwhile, have helped BYD become a leader in the EVS at the cheap end of the market.

All told, the competition is leaving Japanese firms, once leaders, in the dust.

The world's drivers stand to gain from cheaper and greener cars. But can the race for market dominance continue?

China's emergence as an EV superpower is taking place just as the geopolitical climate worsens, and protectionism is finding greater favour in the West.

'' Shutting out Chinese carmakers would be bad for drivers and the planet. ''

The Master Global Essay continues into the future. The World Students Society thanks The Economist.