China is massively increasing its share of electric vehicles and could thus also become the global technology and innovation leader for electric vehicles, including the associated production and supply chain processes. But how should this development be assessed overall and in comparison to current developments in Europe?
As representatives of AKJ Automotive, we had the opportunity to participate in the latest EV100/GREEM Congress in Shanghai at the end of June. This allowed us to exchange ideas with other speakers and participants about which developments and assessments are relevant for the German automotive and supplier industry in Germany and how these specific developments can be incorporated into our own network.
The following eight aspects summarize the current developments, strategic orientations, technological trends, political framework conditions, market structure, and competition, as well as an outlook.
1 - Market development and growth
- Market size and growth: With around 31 million vehicles sold in 2024, China is the world's largest automotive market. Domestic demand continues to rise, with passenger car sales forecast to grow by another 4% in 2025 to 26.8 million vehicles. This is a volume that naturally also allows for high-level innovation.
- Electric mobility: The share of new energy vehicles (NEVs) in new registrations grew from 1.47% in 2022 to 11.26% in 2023 and is estimated to reach 13% in 2024 and 25% in 2025. In the long term, China is aiming for an NEV share of 30% by 2030 and 50% by 2035.
- Price development: Electric vehicles are now competitively priced or cheaper than combustion engines. While electric cars were still 7.8% more expensive in 2017, they will be 4.3% cheaper on average in 2024. The market is characterized by intense price competition, which has been ongoing since 2023.
- Exports and international significance: China is increasingly positioning itself as an export nation for electric cars. German manufacturers such as VW and Audi are adapting their strategies, for example through localization and special brands for China. At the same time, Chinese manufacturers are entering European markets with very aggressive prices.
2 - Strategic orientation of automobile manufacturers
- From “In China, for China” to “Become China”: The traditional strategy of developing products specifically for China is being replaced by deeper integration. Companies must adapt even more intensively to the local pace of innovation and culture in order to remain competitive.
- Localization and innovation: Western manufacturers have learned their lessons and are investing more in local development, ultra-fast product cycles, and customer-oriented solutions. Solutions tailored to young, digitally savvy Chinese customers.
- Market segmentation: In addition to mass market models, luxury and premium segments are regaining importance, e.g., with new model series from BYD, NIO, and German manufacturers that have been developed specifically for China.
3 - Technology trend: Electrical/electronic architecture
- Central E/E architecture: The trend is moving away from many small control units toward centralized high-performance computers (central computing platforms) that enable complex functions and allow software updates “over the air.”
- Computing platforms: Powerful SoCs such as NVIDIA Drive AGX and specialized microcontrollers (e.g., Infineon AURIX™ TC4) are crucial for the control and safety of modern vehicles.
- Sensors: High-resolution cameras and fast data transmission technologies such as GMSL (Gigabit Multimedia Serial Link) are key components for driver assistance and autonomous driving.
4 - Technology trend: Assistance systems, autonomous driving
- Prevalence: 75% of new vehicles are already equipped with Level 2 assistance systems. By 2027, a penetration rate of 35% is expected for Navigate on Autopilot (NOA).
- Functionality: ADAS systems include functions such as lane departure warning, adaptive cruise control, and semi-autonomous driving. These systems are increasingly becoming standard and a competitive factor.
- Technological development: The integration of AI and machine learning is continuously improving the performance of these systems.
5 - Technology trend: Software and connectivity
- Software-defined vehicle: Vehicles are becoming increasingly software-centric, enabling flexible updates and new functions.
- Connectivity: Vehicle-to-Everything (V2X) and, in particular, Vehicle-to-Grid (V2G) are important future technologies that can integrate vehicles into the energy system and contribute to grid stability.
- Digital user experiences: Artificial intelligence and personalized digital services are shaping the driving experience and are a differentiating factor in the market.
6 - Political framework and sustainability
- Environmental targets: Electric mobility is a central element of Chinese environmental policy to reduce air pollution (especially PM2.5) and achieve climate neutrality by 2060.
- Support programs: Financial incentives, tax breaks, and accelerated customs procedures for imported vehicles support the market penetration of NEVs and innovations.
- Smart cities and infrastructure: Electric mobility is being embedded in urban concepts that combine intelligent transport systems and sustainable energy supply. China is demonstrating that this is feasible in selected cities.
7 - Market structure and competition
- Intense competition: In addition to established OEMs, numerous start-ups and technology companies are entering the market, which is increasing the pace of innovation and creating price pressure.
- Market consolidation: Despite strong competition, consolidation is expected in the medium term, with weaker players being eliminated.
- Global expansion: Chinese manufacturers are expanding their presence in international markets, particularly in Europe, with competitive prices and new models.
8 - Outlook/significance for the global automotive industry
- China as a center of innovation: China is increasingly shaping the future of the automotive industry with technologies such as AI, autonomous driving, and digital connectivity.
- Strategic challenge for German manufacturers: To remain globally competitive, German and other international manufacturers must adapt to Chinese developments and integrate them into their own strategies. This also poses a massive challenge for the suppliers integrated here.
- Sustainability and digitalization: The combination of electromobility, digitalization, and sustainable energy supply will shape the mobility of the future.
These points show that China is not only the largest but also the most dynamic and technologically advanced automotive market. The developments that are now taking shape are increasingly setting global standards and thus represent both a challenge and an opportunity for the entire global automotive industry.
The risk of German and European models being displaced and the displacement of the necessary technologies for the vehicles themselves, the production and supply chain concepts, is mitigated by the increasing reliance on partner concepts. Partner concepts for the adaptation of technology and marketing concepts and a stronger focus on the expectations of vehicle users and the possibilities of how vehicles and components can be manufactured and marketed under the current regulatory restrictions.
At our next AKJ Automotive fall conference on October 15–16 in Saarbrücken (Automotive Processes & IT 2025), we will address topics such as German OEMs, suppliers, and service providers, as well as how cooperation with Chinese automakers, suppliers, and networks can be further developed in a spirit of partnership. You find the link to the website of the conference in the first comment of this artikel.
