Introduction

Introduction

Electrification transformation is a systematic project, and no one will give up easily.

Unsurprisingly, the market penetration rate of new energy vehicles will set a new record this year. After crossing the 50% threshold, everything may proceed as expected, with the market share of pure gasoline vehicles shrinking to 30% of the total.

Compared to the slowing electrification process abroad, the current situation in the Chinese auto market is quite "bizarre." However, this inevitably raises the question: Will Chinese automakers, who have already gained an advantage due to new energy, continue to put pressure on all overseas automakers? Under a series of new energy attacks, will the latter be unable to continue operating in the Chinese auto market?

Previously, we heard that Volkswagen secretly halted the mass production project of the SAIC Volkswagen ID.7S, and General Motors, which is struggling with its transformation, is also considering appropriate production cuts to adapt to market demand. Coupled with the closure and transfer of a large number of joint venture factories, such news seems to be sending a signal to people that the rapid changes in China's new energy vehicle market are increasingly exacerbating the technological gap between automakers and testing their viability.

Against this backdrop, it seems reasonable to say that 2024 will be a critical year determining whether all automakers can move forward as expected.

However, as the development direction of the new energy industry gradually stabilizes and consumer behavior evolves around "rationality," facing a controllable future, I always feel that it is too early to declare that joint venture automakers, which are still at the forefront, will collapse from this point on. Volkswagen and General Motors will not give up due to temporary setbacks, and automakers with a slower pace of development, such as Toyota and Honda, will not turn around and leave.

Whether cooperating with Chinese automakers or utilizing the resources of joint venture companies to implement local research and development, the ultimate goal of these multi-pronged approaches is to confront Chinese automakers head-on. By then, if the outcome is determined, they can seek another path forward.

Transformation is difficult, which makes courage all the more necessary

The industry has provided extensive analysis on the topic of joint venture electrification transformation long ago. Many people say that exporting products overseas by leveraging China's new energy industrial chain advantage is the future for most joint ventures. The most typical examples are Dongfeng Peugeot Citroen Automobile and KIA, which intend to make foreign exports their main task.

However, it is evident that this is not a solution suitable for everyone. Especially for giants like Volkswagen and Toyota, a simple and brutal market switch is certainly not feasible under the premises of maintaining local employment and tax revenue, and ensuring supply chain stability.

Yes, due to objective constraints, these leading joint venture automakers have not been able to come up with effective methods for electrification transformation until now, and the pure electric new vehicles they have launched have little presence in the market. Only Volkswagen ID.3, which operates at a loss to attract attention, retains some dignity for the entire joint venture camp.

However, despite the harsh reality, it can still be seen that these companies are not as incompetent as we might think in facing the future of China's new energy vehicle market. At a time when the entire industry is losing money selling electric vehicles, compared to rushing in blindly, it seems more in line with their values to use cash flow to support the company's transformation and intensify efforts to complete early-stage accumulation.

Although the results of Volkswagen's partnership with XPeng are still some time away from being officially unveiled, if we take other joint venture brands as examples, even though 2024 is nearing its end, reviewing the strategic progress over this period can still reveal some clues.

First, we must admit that there has been a significant decline in sales for major joint ventures. The massive offensive of domestic brands, coupled with changes in consumer demand for vehicles, have had a significant impact on them, which have maintained traditional development paths.

For GAC Toyota, which is still at the forefront of joint ventures, some objective conditions are already unchangeable, which means that extending the timeline and considering long-term development for the future has become a priority at this stage.

Within joint venture companies, the term "long-termism" has long been hanging high in the company's core development philosophy. And in order to be as close to this as possible, none of the many answers provided by GAC Toyota this year fails to reflect this point.

Both Chinese and foreign parties are well aware of the great difficulty of full electrification. Despite Akio Toyoda's public grievances about gasoline vehicles on multiple occasions overseas, facing the rapid changes in the Chinese market, GAC Toyota has also been striving to prepare for the past year.

On the product side, regardless of Toyota's own limitations, from the ninth-generation Camry to the annual facelift of the Sienna, the move to collaborate with Huawei to develop an in-vehicle system has almost become the top priority of GAC Toyota's external promotion. On the other hand, from the action of lowering the starting price of the new Highlander before launching it on the market, it can also be observed that facing the pressure of transformation, automakers themselves are not putting on airs.

To put it bluntly, due to the current market situation, GAC Toyota knows that with its current achievements in the electric vehicle field, it still cannot compete head-on with domestic brands. Therefore, every decision made by the Chinese side must pave the way for the upcoming confrontation. From proposing the "Hybrid Family" to advocating "Intelligent Hybrid Dual Engine," relying on the existing product lineup, GAC Toyota only wants to gradually move towards the heartland of China's electric vehicle industry development.

At the same time, for several consecutive auto shows, the GAC Toyota BZ Smart 3X has made appearances like a traveling performer, with the sole purpose of not letting the outside world overlook its existence at a time when electric vehicles are pouring into the market.

Is the late arrival of bZ3X due to delay or accumulation?

Currently, there are only two more weeks until the opening of the Guangzhou Auto Show, and less than two months until the end of 2024. Will the infighting between automakers subside? Obviously not.

For GAC Toyota, although playing at home gives it some geographical advantages, given the current market situation, it urgently needs to confirm the logic of its transformation to the outside world in the remaining time.

Previously, the half-veiled debut of bZ3X made it difficult not to feel that GAC Toyota was slightly sluggish in its electrification transformation. But as of today, with more and more bZ3X test vehicles frequently appearing in the suburbs of Guangzhou, we can clearly see that in addition to launching electric vehicles tailored for the Chinese market to meet new consumer demands, GAC Toyota still has its own ideas.

A couple of days ago, Feng Xingya, general manager of GAC Group, also stated at the Fortune Global 500 Summit that with the maturity and popularization of technology, autonomous driving technology is no longer the core competitiveness of the automotive industry.

In his view, autonomous driving technology becomes a core competitiveness only when its impact on the entire vehicle is so great that it cannot be normally procured from society. But now, with the maturity of technology, social supply can generally meet the demand, and autonomous driving technology is no longer the "soul." In other words, since GAC's development route emphasizes both independent research and development and joint venture cooperation, the joint venture company, as a core participant, has the responsibility to create advantages for itself that cannot be imitated by others.

Regarding bZ3X, I believe that this car must have the profound involvement of the GAC Research Institute behind it. Its understanding of intelligent driving and intelligent cabins is inseparable from the technical contributions of the Chinese team. Considering that GAC's current cooperation with Huawei is strategic and comprehensive, it is very likely that GAC Toyota has been preparing a big move for this car.

However, in comparison, can GAC Toyota's joint venture status play a key role in its transformation?

We all know that one of the most fundamental aspects of Toyota's vehicle production is to ensure the long-term stability of its products. This "stability" should permeate all aspects, including research and development, manufacturing, sales, and services.

Therefore, no matter how fast the industry transforms and exceeds expectations, joint venture automakers will definitely not compromise on this aspect. Even when developing electric vehicles targeting the Chinese market, the importance of bZ3X to GAC Toyota is no less than that of the Camry or Highlander.

Nowadays, the speed of launching new electric vehicles in the Chinese market is undoubtedly the fastest globally, and research and development related to technological iterations are also the most competitive. This makes it all the more necessary for every automaker in China to be meticulous in ensuring product quality control and maintaining supply chain stability.

In the first ten months of this year, regarding bZ3X, although not much detailed information has been revealed about the car's specific product capabilities, we should believe that GAC Toyota is simply reorganizing the car's supply chain system based on Toyota's standards, conducting final verifications for vehicle safety, and striving to match local functions such as intelligent cabins and driving.

Needless to say, at this year's Guangzhou Auto Show, bZ3X will ultimately express GAC Toyota and Toyota Motor's interpretation of the Chinese electric vehicle market to the outside world in its complete form.

At that time, as usual, questions will accompany the launch of this car and appear in various public opinion fields. But still, no matter how China's auto market is transformed, the huge market capacity is driven by a multitude of different consumer demands, which means that diversified competition in the electric vehicle market will not disappear. bZ3X can be very "Toyota," but the research and development approach tailored entirely for Chinese users always reveals its advantages at the right time.

The world has never been black and white, nor profit-driven. If the market retains some rationality, it is time for joint venture automakers, which have experienced too much pain in the past two years, to turn sorrow into strength.