Insights

Western Automakers Can't Afford To Ignore The Threat Of The New 'Made In China'

By Jerome Bouchard and Matthieu Barbiery
This article first appeared in Forbes on January 15, 2018.

When a two-year-old Chinese startup unveiled the Byton—a high-end, artificially intelligent, fully electric sport utility vehicle that is 40 percent cheaper than a Tesla Model X—at last week’s Consumer Electronics Show, it not only threw down the gauntlet in the race to develop "intelligent" electric cars. The company also signaled that Chinese manufacturing has entered a new phase.

Just as China has become a global player in personal computers, solar panels, and integrated circuits to the point that the nation is among the world’s largest producers, we expect China will become a major supplier in new sectors such as aerospace, electric cars, and robotics in the near future. Until now, the Chinese have been held back in these sectors in large part because of concerns over quality and safety. But the fact that Future Mobility Corp. was able to poach some of the biggest names in tech and electric vehicles from companies like BMW, Google, and even Tesla to develop the Byton shows how quickly the landscape can change and how Western companies cannot afford to be complacent.

The Byton has the financial muscle of the nation’s “Made in China 2025” initiative behind it. The 10-year program is dedicated to help China take on top-tier manufacturers in the United States, Europe, and Japan in industrial sectors once considered too technologically sophisticated for low-cost, mass production, like robotics; biopharma and advanced medical equipment; aerospace; power generation; and rail.

Chinese momentum

This stated ambition to transform China into a leading manufacturing power has been greeted thus far by an astounding lack of concern, or even curiosity, among European and US industrial incumbents. To be sure, Chinese electric cars have been unveiled in the past and have not made it beyond China, which is the biggest market for EVs in the world. Worse, some have ended up in bankruptcy. Nonetheless, the Byton, which is said to be aiming for a production of around 300,000, has global ambitions and demonstrates China’s capacity and unwavering determination to make it happen—perhaps well before 2025 in some sectors. And with Guangzhou Automobile Group (GAC) still rumored to be eyeing a bid for Fiat-Chrysler and showing up at the North American International Auto Show in Detroit this week with a new electric car aimed at digital natives and other new models, it’s clear that China is determined to keep pushing forward.

Read the rest of the article on Made in China 2025 and China’s manufacturing aspirations here.

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