If Chinese automakers can be trusted, many people really love karaoke. Those people love karaoke so much that they want it in their family cars.
According to Arno Antlitz, Volkswagen’s chief financial officer, this was not something that the European mind could understand a few years ago. However, the technology included in the electric vehicles sold by China’s BYD and XPENG is just one example of the lessons Volkswagen and its European counterparts had to learn as they were trying to escape to catch up with their Chinese rivals to dominate the global electric vehicle market.
“No one in Wolfsberg thinks you need karaoke in your car,” Antlitz told a meeting run by the Financial Times last week. “But you need it.”
Ten years ago, such humility from the world’s second largest automaker was amazing. Few people promoted the Chinese European brand. Global industry was dominated by long-term automaker countries led by Germany in Europe, France, the UK, and Japan and South Korea in Asia. However, the advent of batteries provided a clear run for Chinese manufacturers (with giant state subsidies) who were trying to dominate the new electric vehicle industry.
They seized the opportunity. According to data from electric vehicle analyst Matthias Schmidt, the Chinese brand achieved more than 10% share of European EV sales in the months of 2024, but returned to 7.7% in February. However, the size of the Chinese home market is unparalleled, with 12.8 million batteries and hybrid cars sold in China in 2024 exceeding the entire European auto market.
China’s rapid advances have surprised rivals, especially after a technological leap in the era of coronavirus pandemic isolation. Bentley boss Frank Stephen Wallizer told the FT Conference that the technology presented to the world at the 2023 Shanghai Motor Show “is like a shock that comes back after a cold pause.”
Chinese automakers are increasingly competing for a future where cars are fully integrated with the digital lives of other users and fully integrated with most driving themselves. Of the western automakers, Tesla remains a leader in this respect, but its technology led to China’s BYD, with CEO Elon Musk focusing on electing Donald Trump as President of the United States. Despite support for masks, Trump’s policies are expected to slow American automakers a lot.
Chris McNally, an analyst at investment bank Evercore ISI, wrote in a note to his client after visiting his latest Shanghai show last week. He cited Huawei Computer Chips’ experience handling the driving while sitting on the massage seat of an Aito M8 Luxury SUV and watching the film on a retractable projector screen. It was all available for half the price of Western luxury competitors.
Global market share of three big car manufacturers in Detroit, Germany and Japan has fallen from 74% to 60% over five years, McNally said. “If you’re a US/EU manufacturer and don’t have plans to go to the market with affordable/scaled EVs over the next five years, you could potentially go out of business in the 2030s.”
He added: “Are the games lost for Western makers? We can only say they’ll make a big appearance at halftime in auto-evolution.”
BYD’s Segal ruffles its feathers in China at a price of around £6,000. It has an autonomous technology called “God’s Eye,” which coincides with what is available in more expensive cars, but it’s far below its rivals. It achieved that price by using heavier sodium-ion batteries that sacrifice the range for affordability, but it still shows what European manufacturers are opposed to.
According to an analysis by consulting firm Bain & Company, Chinese automakers can on average develop cars at 27% of the cost of their European rivals.
It’s not just the end of the cut price. The Chinese manufacturer was in effect last week on a test day run by the British lobby group, automakers and traders Society. BYD’s new £33,300 Seal U DM-I, plug-in hybrid family SUV, is facing Volkswagen, where plug-in hybrid Tiguan can be more expensive than £10,000.
The state-owned sherry (under Omoda and Jaecoo Brands) was accompanied by Leapmotor, Geely (owner of Volvo, Polestar and Smart Brands), and Xpeng. In a week of testing, the Guardian found a wealth of driver assistance features and a smart, spacious interior that rivals the Tesla Model Y.
They all offer sharp-priced cars with little separation from their European rivals. It has a relatively smooth ride and an impressive voice assistant that allows drivers to open the sunroof without taking their eyes off the road. One of the most popular vehicles for testing was the fiercely rapid MG Cyberstar Electric Sports car, made by the state-owned SAIC.
There were signs of a fight from Europe. Starting at £23,000, the Renault 5 has already gained great popularity as one of the first affordable European-made electric vehicles. Renault struggles to reduce the production costs of its vehicles as much as possible, and although it is not clear how profitable the model is, it is extremely popular.
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The French automaker is also trying to narrow down the time it takes to sell from 3 to 2 years, with the help of an unnamed Chinese partner, from 3 to 2 years on the next car, Renault 4, and the upcoming Twingo.
If you can’t bump into them, joining seems like a popular European strategy. Volkswagen has invested in XPENG (more suitably Xiaopeng), and Stellantis sells jumping cars in Europe and is expected to use that technology, but Scandinavian brands Volvo and Polestar are increasingly dependent on technology from their owners, China’s Geely.
UK JLR is working with Chery to build cheaper vehicles under the previously retired Land Rover Freelander brand. According to JLR boss Adrian Mardell, the car that will be released in the second half of 2026 “may become global.” Nissan boss Ivan Espinosa suggested that Japanese automakers could build Chinese cars in Sunderland, northeastern England, to use spare capacity.
Avoiding Chinese technology is not adjacent to many companies, even if they wish. Most of the batteries are made in China, with some competitors being made in Japan and Korea. European battery champion North Bolt has collapsed. Meanwhile, BYD revealed in March that its new battery could add a 250-mile range with a five-minute charge. CATL shares rose 16% on Tuesday in its stock market debut in Hong Kong.
Europe has some defensive powers. There is a huge network of dealers (still preferred models for purchase) and a garage where you can perform maintenance. This slows down the progress of Chinese brands.
“European buyers are actually very conservative buyers and are very loyal to the car brand,” said Eric Zeyer, the leader of Bain & Company’s European cars. “It’s extremely difficult for Chinese people to enter Europe and replicate their success.”
He added that he needs to persuade Chinese brands not to disappear, just as the US electric brand Fisker happened.
The European boss claims that the game has not been lost, even if it is clear that China will at least win a substantial portion of the global automotive market.
Bentley’s Walliser says that “Chinese is at a higher risk of intake, faster and harder,” and embraces new technology. “It’s not magic,” he said. “You can do it here too.”
“Don’t underestimate the resilience of car companies,” said Luca de Meo, CEO of Renault.