by Diplomatic Council member Karlheinz Zuerl*

The crisis at Volkswagen and other European carmakers is largely homemade. For many years, European industry has not been innovative enough compared to China. And this applies not only to the automotive sector. Here are concrete examples from the Chinese automotive industry.

There is the remarkable success of range extender concepts, which have enabled manufacturers such as Li Auto and Leapmotor to double their delivery figures within a year. These vehicles, known in the industry as EREV (Electrical Range Extender Vehicles) or REEV (Range Extender Electric Vehicles), use an electric motor for propulsion, just like conventional electric cars. However, they also feature a compact combustion engine that periodically recharges the battery, thereby significantly extending the vehicle's range by a few hundred kilometres. This eliminates consumer concerns about range and makes the vehicles suitable for use in regions with limited charging infrastructure.

The battery replacement concept of the Chinese carmaker Nio as another example. The company has set up a network of battery swap stations where a nearly flat battery can be exchanged for a fully charged one in just a few minutes, thus eliminating the need for lengthy charging processes.

Also to mention that BYD has brought a new type of technology to the market with its blade battery (using lithium iron phosphate instead of the usual nickel cobalt manganese), which is considered to be particularly safe and less susceptible to thermal runaway, has low production costs and, thanks to its flat design, can be accommodated more efficiently in the vehicle.

Another example of Chinese innovation in the automotive sector is the XPeng XPilot autonomous driving system, which is considered to be superior to Tesla's Autopilot (Full Self-Driving) in inner-city traffic.

Last example is the MS11 electric car from Xiaomi, which features a customisable cockpit. This is achieved through the use of flexible controls, which can be fitted using magnets. This approach is reminiscent of the MagSafe concept, which was first introduced on Apple's iPhone.

In contrast, European carmakers have focused their efforts in recent years on developing a platform for electric vehicles to maintain pace with Tesla – that’s it.

Fundamental rethink on China

The economies of Western industrialized nations should fundamentally rethink their approach to China. Instead of viewing the People's Republic as primarily a sales market, the Western manufacturers – not only in the automotive industry – should draw inspiration from China's innovative spirit.Services'.

The competitive advantage that the Western industrial world once held over China has eroded in many areas. This is exemplified by the automotive and mechanical engineering industries. Many politicians and even business leaders in the West are reluctant to acknowledge this reversal. However, the solution is not to ignore the facts but to establish a new relationship with China's innovative and economic capabilities. For decades, China was the recipient of Western expertise. However, the situation has now reversed.

* Karlheinz Zuerl was honoured by United Interim, the leading community for interim managers in Central Europe, and the Steinbeis Augsburg Business School as „Interim Manager 2024“. He is CEO of GTEC which helps Western industrial companies to overcome challenges in Asia. The focus is on business development, the establishment and expansion of branches and production facilities, as well as restructuring and turnaround measures to bring automotive suppliers and mechanical engineering companies in critical phases back into the profit zone.