The Realm of Electrical Vehicles in China: The Present and The Beyond

Pierluigi Visotti an accomplished business leader with significant in- dustry expertise, he brings with him a proven record of project mana- gement, problem solving, and building strategies. Prior to joining Bitron, he has held integral roles in esteemed vehicle manufacturers, including Magneti Marelli, Maserati, and Alfa Romeo. Having worked extensively across Europe, Asia, and South America, he on boarded Bitron in 2019 as a head of program management, growing to steer the company’s endeavors in APAC program management and business development.

In a recent conversation with Prisila, a correspondent for Asia Business Outlook Magazine, Pierluigi Visotti shared his valuable insights on the current and future of OEMs and electrical vehicles (EVs) in China. Below are some highlights from the exclusive interview:-

What role does technology and innovation play in global expansion plans, particularly in areas like EV and autonomous driving?

Traditionally, despite mutual partnerships, Chinese OEMs could not compete with the combustion engine platforms of established car manufacturers, such as Toyota, Volkswagen, or Daimler, who are backed by years of extensive experience and technology acumen. But today, China has taken the reigns in EV, battery management, connectivity, entertainment, and infotainment technologies because of their competence and access to the best supply chain, innovations, and technologies. In Europe or North America, customers value the driving experience especially comfort and handling. But, as the automotive industry shifts towards autonomous driving, driving will become more about entertainment; customers will value more the opportunity to have experiences in car: having meetings, videoconferences, watching movies, playing videogames. Local Chinese OEMs have embraced the change way before the international OEMs, positioning themselves as leaders in the global market.

What are the challenges and cultural differences while expanding into various international markets?

Despite technological and supply chain advantages, Chinese OEMs struggle to promote their business models in regions like Europe and North America. The impact of American culture, influenced by historical conflicts and post-war progress, has made these nations wary of Chinese products and their quality. It is crucial for the Chinese OEMs to reinvent themselves as strong brands by crafting compelling portrayals of their innovations, entrepreneurship, business models, and sustainable future. Generally, Chinese companies often send their leaders to countries such as Northern Europe, the UK, or Northern and Southern America for business expansion, which might not always be the ideal approach. It is imperative for them to understand the country’s culture and language before entering the traditional market. One of the significant strategies is to blend local talents with their organization under the guidance of juggernauts well-versed in the language and culture, which can further pave new paths for them to facilitate communication of the success stories of Chinese OEMs.

Could you discuss the impact of geopolitical and trade tensions on international business operations and how we navigate these challenges?

From China’s perspective, this challenge stemmed primarily from the imposition of tariffs by Trump’s USA on imports from China. Now, selling Chinese cars in North America incurs a 25% tariff. Although there are discussions underway about potential removal or reduction, the outcome is uncertain. However, Chinese companies are responding to this by zeroing in their focus on Europe and South America and have set up multiple R&D centers in Europe, including in Germany, England, France, Italy, and Sweden, except in the Northern European regions, which will aid business growth as well as the integration of Chinese culture into the diverse markets. Many leading firms have also started establishing or acquiring assembly plants in regions covering Hungary, Northern Europe, and Italy, predominantly starting in Europe owing to its accessibility and lower tariffs. Considering the costs, this trend is slowly moving towards South and North America. In addition, the Middle East is also witnessing a focus shift from petroleum to electric vehicles, especially in Dubai, Abu Dhabi, and other Emirates, attracting investments and assembly plants from (and to) Chinese car makers and startups.

"The automotive industry will always be a key growth engine for China’s economy"

How are most organizations addressing environmental concerns and regulations in different regions?

China has a 100% rate of sustainability standard compliance, through the government and strong relationships between the state and private OEMs. By 2035, traditional internal combustion engine cars are likely to fade in Europe. Chinese carmakers utilize the restrictions to foray into the market with ready products, outpacing their European counterparts and reaping advantages in costs and time-to-market. North America, on the other hand, is making the lives of manufacturers like Tesla and Karma Automotive easy by tailoring (or easing) the rules so as to obstruct Chinese OEMs to prevent potential competition.

How can we leverage our unique strengths and capital capabilities to gain a competitive advantage in the EV industry? What can you anticipate for the electric vehicle sector in the Asia region in the upcoming years?

Comparatively, the automotive industry will always be a key growth engine for China’s economy. The biggest advantage does not lie with the tier-one, but rather with the Chinese OEMs that are currently dominating the local market but are aiming for international expansion. This is primarily due to our control of the raw materials and supply chain, which the European or North American OEMs lack. When developing EVs or car components in North America or Europe, instead of combating tariff wars, other traditional carmakers still need to consider China to give them a further edge. Additionally, the need of the hour is also the evolving skill set. Previously, mechanical and electrical prowess was enough, but today, leaders require extensive software, design, management, and material competencies. Enhancing battery performance through material and cooling strategies has become pivotal to outpacing the dynamic automotive landscape. Moving forward, I believe that the EV market will soon dominate the local realm, which is also a herald of a global transformation. Embracing EVs could positively impact the planet, economy, and various industries. It is just the first step to a better world. EVs alone are not enough. EVs as part of a new virtuous and integrated system is the correct reading key for the future.