A decade ago, joint venture brands dominated half of the Chinese automotive market with their mature fuel vehicle technology and brand reputation. Volkswagen's TSI+DSG golden powertrain combination and Toyota's THS hybrid system became market benchmarks, while independent brands were confined to the low-end market below RMB 100,000, struggling repeatedly to break into the premium segment.

A decade later, the wave of new energy and intelligence has rewritten the rules of the automotive industry. Data from the China Passenger Car Association in February 2026 shows that the new energy penetration rate of mainstream joint venture brands stands at 4.5%, dropping to as low as 3.1% under some statistical measures, while independent brands have surpassed 60% in new energy market share. Giants like Honda, Volkswagen, and Stellantis have fallen into a performance slump, while independent brands such as BYD, Geely, XPeng, and Leapmotor are rapidly rising on the global stage.

▍Trapped in Shackles and Lost in Transformation

On the dual tracks of new energy and intelligence, joint venture brands have failed to maintain their technological edge from the fuel vehicle era or keep pace with the rapid changes in the Chinese market. Previously, multinational automakers shouted slogans of "full electrification," with General Motors announcing a USD 35 billion electrification budget and Volkswagen setting a goal of "80% electric vehicle sales by 2030." However, these plans overestimated the sustainability of global policy incentives, misjudged consumer acceptance speeds, and simply equated electrification with "retrofitting fuel vehicles to electric," lacking innovation in underlying architectures.

After the U.S. canceled the USD 7,500 electric vehicle tax credit and the EU relaxed its 2035 fuel vehicle ban, demand for electric vehicles in Europe and America (Note: ' Europe and America ' is translated as 'Europe and the U.S.' in context, but kept as pinyin here for accuracy to original if it's a specific term) markets plummeted, forcing multinational automakers to urgently retract their strategies: Porsche terminated its battery self-production plan, incurring a special loss of EUR 4.7 billion; Honda suffered its first annual loss in 69 years due to electrification strategy adjustments, projecting a net loss of JPY 690 billion for FY 2026, with related losses reaching up to JPY 2.5 trillion.

The generational gap in intelligence has caused joint venture brands to lose favor among mainstream consumer groups. If electrification represents a powertrain revolution, intelligence is the soulful reshaping of automotive products, which happens to be the core competitive point in the Chinese automotive market. As Generation Z becomes the main force of car buyers, they rank "intelligent driving capabilities" and "cabin tech-savviness" among their top three decision-making factors, while joint venture brands remain cautious in implementing intelligent technologies.

In terms of hardware, independent brands have already widely adopted NVIDIA Orin chips with 254 TOPS of computing power, and even higher-grade NVIDIA Thor chips are gradually being integrated. However, many joint venture models still use Mobileye Q4 chips, creating a generational gap in intelligent driving hardware. More critically, the "headquarters-decision, local-execution" mechanism of joint venture brands prevents them from rapidly responding to changes in the Chinese market: independent brand new energy vehicles can introduce new models in 1-2 years, with some brands achieving quarterly upgrades via OTA, while some joint venture brands take 5-7 years to complete a model refresh. While joint venture brands are still discussing next-generation platform plans, independent brands have already completed two rounds of product upgrades. This rhythmic gap leaves joint venture products consistently lagging behind market mainstream. Meanwhile, the brand premium that joint venture brands once relied on is continuously eroding.

The strategy of sacrificing price for volume and the imbalance between huge investments and returns have worsened the survival conditions of joint venture brands. In 2026, another round of collective price cuts was initiated, with maximum per-unit reductions reaching RMB 300,000. The BMW i3, with an official guide price of RMB 350,000, saw its terminal bare-car price drop to around RMB 200,000, while new energy models from Toyota, Honda, and other brands also slashed prices.

However, "sacrificing price for volume" is by no means a long-term solution. For example, in November 2025, new energy models averaged an 18.7% discount, yet passenger vehicle sales declined by 8.1% year-on-year. The BMW i3 still sold only 1,000-2,000 units per month after price cuts, while the FAW Toyota bZ3 sold 22,600 units in 2025, down 55.6% year-on-year.

Notably, joint venture brands are not stingy with investments. General Motors invested RMB 70 billion in electrification in China, while Volkswagen invested EUR 2.4 billion to form a joint venture with Horizon Robotics to strengthen intelligent driving R&D. However, in 2025, Volkswagen's operating profit dropped by 53%, Porsche's sales profit plummeted by 92.7%, and Honda's electrification-related losses equaled the total profits of the past three years.

Additionally, the market share of joint venture brands continues to shrink. In 2025, mainstream joint venture brand passenger vehicle sales reached 5.77 million units, with their market share dropping from 51% in 2020 to 24%, more than halving in five years.

▍Joint Venture Brands' Quest for Change and New Track Opportunities

Despite being in a predicament, joint venture brands are not defenseless. Their decades-accumulated technological heritage, global channel resources, and strong will to survive still leave room for breakthroughs. Since 2025, joint venture brands have embarked on a multi-dimensional self-rescue path, ranging from localized decentralization and deep collaboration with Chinese companies to layout (Note: ' layout ' is translated as 'laying out' in context, but kept as pinyin here for accuracy to original if it's a specific term) hybrid tracks and exploring reverse exports. The unique advantages of China's new energy market also offer new development opportunities for joint venture brands. This self-rescue is not only about holding onto the Chinese market but also about finding a new positioning in the global automotive industry's restructuring.

The in-depth exploration of localized decentralization has become a key step for joint venture brands to adapt to the Chinese market. For a long time, product planning for joint venture brands was dominated by foreign parties, leaving Chinese sides without a say, resulting in products detached from Chinese consumer needs. Nowadays, more and more joint venture brands are delegating R&D decision-making power to local Chinese teams. Toyota established the "China Chief Engineer (RCE) System," handing over core vehicle development authority to Chinese teams. The shift from "Made in China for China" to "Defined in China for China" among joint venture brands has become an irreversible trend. The shortening of decision-making chains and the strengthening of localized R&D are gradually freeing joint venture brands from " climate sickness " (Note: ' climate sickness ' is an idiom meaning "not adapting to local conditions"), which is also the foundation for their continued presence in the Chinese market.

The "reverse binding" with Chinese companies has also enabled joint venture brands to ride the fast track of China's intelligence and supply chain. Nowadays, BMW collaborates with Huawei to develop in-car systems, Ford partners with CATL in the battery sector, and Volkswagen's joint development with XPeng serves as a typical example—their first collaborative model, the Zhong 08, has opened for pre-sale, while the Zhong 07, equipped with the jointly developed CEA electronic electrical architecture, is about to debut.

It is foreseeable that such collaborations will continue. In the field of intelligence, China has become a global innovation hub, while in the electrification supply chain, Chinese companies' cost and technological advantages have formed a moat. Through deep cooperation with Chinese tech companies and independent brands, joint venture brands can quickly compensate (Note: ' compensate ' is translated as 'make up for' in context, but kept as pinyin here for accuracy to original if it's a specific term) their shortcomings in intelligence and batteries, while Chinese companies can leverage joint venture brands' global channels for technology export. This mutually beneficial cooperation model is becoming an important path for joint venture brands' transformation.

The global layout of reverse exports has provided joint venture brands with new market growth points. In 2025, China's new energy passenger vehicles accounted for 68.4% of the global market share, and China's new energy manufacturing advantages have become a crucial support for joint venture brands. By utilizing China's new energy supply chain and production bases to achieve a "Made in China for the World" layout, joint venture brands can not only absorb domestic production capacity but also leverage China's technological advantages to explore overseas markets. Behind this model lies the transformation of China's automotive market from "product imports" to "product exports" and from "technology imports" to "technology exports," with joint venture brands becoming participants and beneficiaries of China's automotive industry globalization.

Additionally, joint venture brands' accumulations in quality control, safety, and global service networks remain significant advantages. Despite temporary setbacks in intelligence and electrification, their decades-accumulated production processes, quality control systems, and global sales and service networks are difficult for independent brands to surpass in the short term. When joint venture brands combine these advantages with China's intelligence and electrification technologies, they can form new product competitiveness.

For joint venture brands, breaking through requires truly achieving deep integration of "localization." This integration is not just about product localization but also encompasses R&D, decision-making, and cultural localization in all aspects. Chinese teams must have genuine decision-making power to ensure products truly meet Chinese consumers' needs. Meanwhile, joint venture brands need to increase R&D investments in electrification's underlying architectures and intelligent core technologies, leveraging collaborations with Chinese companies to quickly make up for shortcomings. By combining their traditional strengths with China's new energy technologies, they can form differentiated product competitiveness. Furthermore, joint venture brands must grasp changes in the global automotive market, leverage China's new energy manufacturing advantages to achieve a "Made in China for the World" layout, and seek new growth points in overseas markets.

Layout 丨 Yang Shuo

Image sources: Qianku.com, BMW, Volkswagen