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'China Speed' Is the Global Auto Industry's New Benchmark
Automakers' New Yardstick Is Defined by Rapid-Fire Development Cycles, Software-First Design and Cost Compression
A Chinese-made Leapmotor C10 was traveling down Germany’s fast-moving Autobahn last year when the driver-assistance system braked sharply and jolted it to the side, as if boxed in by scooters in a crowded China megacity.
Leapmotor International’s Germany head, Martin Resch, wasat the wheeland emailed engineers in Hangzhou to report the problem before going into a meeting. By the time he got out, a software update had been beamed to the electric vehicle, smoothing its behavior. A similar fix at a European carmaker would have taken weeks.
Executives call it China Speed, and it’s the global auto industry’s new benchmark.
For decades, carmakers measured themselves against German engineering, Detroit scale or Japanese reliability. Now executives from Michigan to Wolfsburg are confronting a new yardstick — one defined by rapid-fire development cycles, software-first design and relentless cost compression born of China’s EV boom.
Just as Japan’s ascent in the 1970s reshaped the industry with lean production and ruthless efficiency, China’s rise — led by companies like BYD, Geely and Leapmotor— is rewriting the rules again, with flatter development timelines, deep supply chain integration, boldideas and cars that gain new features in real time through over-the-air updates.The result turns on its head the industry’s goal to sell perfect products, creatingone where fixes can come later —though sometimes at acost.
The shift is no longer theoretical. Stellantis isweighingwhether to use EV platforms and software from Leapmotor to underpin models for itsEuropean brands Fiat, Opel and Peugeot, and is separately talking with Xiaomi Corp. and Xpeng Inc. aboutinvestingin its European operations, Bloomberg hasreported. It’sa striking admission thatmajor legacy manufacturersmay need Chinese engineering to compete on their own turf.
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Geely’s safety center in Ningbo works on strengthening vehicle cybersecurity and the operational standards of software-driven safety features. (Qilai Shen/Bloomberg)
The technology seep goes beyond the mass market, with luxury-car makerMercedes-Benz Group AG holding early talks with Geely for possible cooperationon futureEVs, Bloomberg has reported.
Japanese carmakers arealso tapping into Chinese expertise.Nissan Motor Co., which pioneered the battery-car market with its Leaf in 2010, is now relying on China to become a springboard for EV exports, investing at least 10 billion yuan ($1.4 billion) to develop battery-powered cars on the mainland for sale abroad.
“What China gives us is access to the same advantages that have reshaped the competitive landscape: speed, technologyand cost,” outgoing NissanChief Financial Officer Jérémie Papin said in an interview. “You will start to see the first of these China‑sourced products reach global markets soon.’’
In the US, where protectionist walls have long kept Chinese automakers out, cracks are starting to show. AsChina makesinroadsin Mexico and Canada, Ford Motor Co. has talked with President Donald Trump’s administration about howU.S.-China joint venturesmight be structured when China inevitably enters the domestic market — a scenario CEO Jim Farley has labeled an “existential threat.”
Dismissed for decades as a low-cost outpost for copycat engineering, China has poured resources into a state-backed race to dominate advanced manufacturing. In EVs alone, government support has totaled at least $230 billion since 2009,according tothe Center for Strategic &International Studies.
While legacy automakers are trying to reduce their typical five- to seven-year product plans, their Chinese rivals can deliver a new model in under two years. Founders at Xpeng,Nioand Li Autoall hadinternet startups, and Lei Junof Xiaomi has a background in software.
Workforces skew young and mobile, and pay scales are lower than at Western counterparts — with compensation often tiedto financial targets,fostering an entrepreneurial culture.Ferocious domestic competition forces continual innovation and squeezes out inefficiencies.
Patent datareflects China’srise to the top of the pecking order. Itgenerated more than 343,000 patents in future landtransportation technologies from 2000 to 2023 — almost five times Germany’s total — and has driven most of the global growth since 2018, according to theWorld Intellectual Property Organization.
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Beijing’s long-term financial support means China Speed is as much a product of state backing as industrial prowess, with periodicbailoutsand aid to some businesses unlikely to become self-sustaining over the long run.
No matter, the impact is real. To stay competitive, automakers and suppliers from outside of China are locating agrowing share of their engineering brainpower there.
Robert Bosch GmbH, the world’s largest traditional auto parts supplier, is shedding thousands of manufacturing and development jobs acrossBaden-Württemberg, theGerman statewhere Carl Benz invented the automobile in the 1880s,to shift work in areas such as battery and driver-assistance systems to China.
Some European executives describe this as a “Nokia moment” — a reference to when Apple Inc.’s iPhone crushed the Finnish mobile-phone leader. Europe’s auto champions may be forced to choose between clinging to a dying business model or plugging into Chinese technology to survive.
Measured against the new reality, Germany is “simply no longer productive enough,” ChancellorFriedrich Merz said in late February after returning from China. “Work-life balance and a four-day week will not sustain prosperity in our country in the long term,” he told reporters. “We simply have to do more now.”
Where European carmakers once set the standards for carmaking collaborations, they are increasingly forcedto adopt Chinese platforms and engineering practices.
For Bosch, theadvantage has as much to do with speedas withcosts: in one project, engineers in Suzhou, near Shanghai, redesigned an electrical connector in six months —roughly half the time it would have taken teams in Germany, according to people familiar with the matter.
A Bosch spokesperson declined to comment on specific projects. They added thatChinese development timelines are typically much shorter, and described the country as a key innovation hub for the company.
At the Hangzhou Bay research hub ofGeely Auto— part of a constellation including Lynk & Co,Zeekr, Polestar, Volvo and Lotus — the lights are sometimes on 24/7 and engineers stream in and out of glass-walled labs, compressing concept-to-production cycles. The extra shifts can’t be matched inEurope due toworkplace restrictions.
Physical proximity between design, manufacturing and suppliers —fostered by Tesla Inc.’s Shanghai factory, opened in 2019 — alsospeeds development and eases communication.In the Yangtze River Delta, an EV maker can often find every component within a 200-mile radius — narrowinglead times for prototyping and logistics, and lowering barriers for would-be automakers withsoftware ordesign roots to launch acompany, even if they lack deep manufacturing experience.
Leapmotor, whosefounderZhu Jiangmingstarted inelectronics, self-develops most core components, including battery, motor and the electronic control system, as well as smart driving technology. When a problem crops up, a team is in place and can quickly respond, asResch, the executive in Germany, witnessed from the Autobahn.
“You’re starting from a piece of white paper and you’re able to optimize everything,” said Tianshu Xin,CEO of the Leapmotor International venture betweenthe Chinese carmaker and Stellantis.Greater control over design and component flows allows manufacturers tofine-tunefor speed at every stage of production.“This engineering culture permeates the entire ecosystem from the ground up.”
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Tesla's Gigafactory in Shanghai. (Qilai Shen/Bloomberg News)
In the software-industry mindset of China’s newer crop ofautomakers, new features don’t have to be perfect when cars are shipped — sometimes they can merely be functional, with updates and fixes arriving later.
John Paul MacDuffie, a professor at Pennsylvania’s Wharton School who has researched Chinese production methods, said there’s a higher tolerance for mistakes, partlygrowing out offlatter hierarchies and aggressive work cultures, while also citing techniques used toaccelerate development.
“Much of the speed comes from companies beginning production before validation is complete, and compressing development stages so they overlap rather than waiting for the previous phase to finish,” MacDuffie said.
This ship-then-fix approach has led to concerns about reliability.In October, JD Power’sannual surveyfound declining dependability of cars sold in China for the second year running, with the top Japanese and American JVs performing better than local brands. Inadequate R&D validation systems and mounting cost pressures are “now emerging as a systemic risk to overall quality stability,’’ it said.
Chinese regulators have separatelysought to rein in a long-running price war that they worried would lead manufacturers to cut corners on vehicle safety.
Geely’s Lynk & Co went viral in late February, after a Z20 compact SUV turned off its headlights at night by mistake, when the driver asked to shut an interior reading light. The glitchplunged the vehicle into darkness, and it eventually crashed into a roadside median.
No one was hurt but the online maelstrom that followed raised questions about reliability and the inadvertent outsourcing of product testing to customers. Mu Jun, a Lynk & Co senior executive, apologized and a software patch was installed to prevent headlights switching off by voice, according to apost last month on Weibo.
Growing Clout
China’s growing clout is partly an outgrowth of earlier decisions by European, U.S. and Japanese carmakers to locate manufacturing there in exchange for access to itsfast-growing market,said Kai Gramke, CEO ofEconSight, a consulting firm that tracks patent trends.Innovation tends to follow manufacturing, he said, with many Chinese patents related to advanced technologies such as batteries, EVs, AIand autonomous driving.
“In the past, China has bought European-designed cars or U.S.-designed cars,” he said. “In the future, we might be buying Chinese-designed cars with all the Chinese specifics.”
In Europe, where Chinese brands have claimed agrowing shareof sales, the pace and depth of collaborationis accelerating.Renault developed its new Twingo EV at itsShanghai-based R&D center, and will source40% of its parts, in terms of value, from the mainland. This month, Leapmotorconfirmedit’s in talks with Stellantis to expand their cooperation on cars and components.
Audi is working with SAIC Motor Corp. to develop electric models on a local platform for sale in China, while its parent Volkswagenhas teamed up withXpeng, including through platform sharing, to sharpen its competitiveness in China.
NarrowerGap
Chinese automakers have spentnearly fivedecadesnarrowing the gap. In 1978, a Chinese delegation appeared at Volkswagen’s gates in Wolfsburg, Germany, offering market access in return for know-how— a bargain that led to Shanghai Volkswagen and a web of JVs pairing German engineering with Chinese scale.
Volkswagen, BMWand Mercedes-Benzfeasted for years on China’s explosive demand, reaping sales and profit and secure factory jobs back home.
Over time, Beijing set out to redraw the terms of trade. Automotive technology was elevated to a strategic priority under the “Made in China 2025” plan to dominate advanced manufacturing. Wan Gang — a former Audi engineer who became China’s science and technology minister — championed EVs as a shortcut past combustion incumbents, and steered billions into battery research.
Now, China leads global battery production through companies such as BYD and CATL, commands critical stretches of the EV supply chain and sets the tempo in automotive software, from digital cockpits to over-the-air updates.
Chinese carmakers have used their cost and speed advantage to churn out affordable models at a time when consumers, stung byrepeat crises in the global economy,have less money in their wallets. European automakers and their suppliers have no chance tocompete on cost, said Barbara Resch, a Mercedes supervisory board member and head of the IG Metall union inBaden-Württemberg.
“We are at a decisive juncture,” she said. “If policymakers fail to set the right course, future technologies such as battery and hydrogen drives will migrate out of Baden-Württemberg.”
Nissan, for its part, will target its Chinese-developed EVs to markets in the Middle East and the Southern Hemisphere,where competition from Chinese brands is most intense, CFO Papin said.The company has rolled out three of the 10 models it has said it plans to debut in China, including the fully electric N7, which did surprisingly well after sales opened last April.
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The controls and screen interface of a Xiaomi SU7 Ultra electric vehicle on display in Barcelona. (Angel Garcia/Bloomberg)
Ford CEO Farley, afanof Xiaomi’s SU7 EV, has been seeking a way to structure American-controlled JVs so that both the Chinese and U.S. partners would share profits and technology, Bloomberg reported in February.
“It would make sense for U.S. automakers to leverage what European players are already doing,” said Augustin Friedel, associated partner at MHP, a management and IT consultancy owned by Porsche AG.
After writing down billions in investments in EVs, some auto industry incumbents have retreated to the relative safety of high-margin combustion models.Yet the move favoring short-term gains puts legacy automakers further behind in the energy transition that’s still moving forward and likely tobe acceleratedby the oil price shock from the Iran war.
For now, U.S. tariffs on Chinese cars protect American manufacturersfrom domestic competition. Trump’s rollback of EV subsidies and emissions mandates also makes the math harder forselling battery-powered models. European Unionregulators have thrown up less-firm barriers,levying tariffs onChinese-made EVs that were swiftlycountered with hybrids and commitments to build locally.
In the meantime, Chinese carmakers have made inroads in places like Brazil, Mexico, the U.K. and the Middle East — eating away at markets that have been strongholds for Ford, General Motors Co. or Mercedes. Analysts at UBS estimate that battery cells alone give Chinese automakers like BYD a $2,000 cost advantage per vehicle, and predict they’ll grow their global market share to 35% by 2030 from 25% in 2025, mainly with export sales.
“We see this advantage persisting, thanks to China’s scale, R&D leadership and supply chain depth,” analysts led by Patrick Hummel said in February.
It’s an open question how much of their cost advantages Chinese automakers could replicate building cars in the U.S. or in Europe, saidTerry Woychowski, a former GM executive who is now president at Caresoft Global, an engineering consultancy. It would cost about $3,000to make Xiaomi’s new YU7, a competitor to Tesla’s Model Y, compliant in the U.S. market, he estimates.
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Touting quality and dependabilitycould potentially be an avenue for automakers from Europe, Japan and the US to capitalize where they still have a perceived edge. Yet despite the recent backsliding, Chinese carmakers havenarrowed the initialqualitygap over the past decade-and-a-half, based on JD Power’s annual surveys. Japanese, US and European brands maintain a significant advantage in dependability, which measures longer-term reliability.
In the end, there’s little debate among top executives thatChina is setting the pace —signaling a bumpy and unpredictable future for the automakers who defined the combustion era, along with themillions of people in Europe and the U.S. who depend on the industry for their livelihoods.
Germany can learn from China’s “systemic approach,” Volkswagen CEO Oliver Blumesaid in an interview with Germany's Bild newspaper over the weekend, saying its five-year plans, disciplineand clear priorities optimize the industry’s structure.
“There is no other region in the world where the transformation of our industry is taking place more consistently, dynamically, or rapidly,” the CEOsaid at an event in Berlin in January. “In China, it is decided who will be at the forefront of this transformation.”
