Traditional Carmakers Accelerate Electrification Transition, Deepening Cooperation with Chinese Suppliers and Tech Companies

The global automotive industry is undergoing a paradigm shift more profound than any in its history. The internal combustion engine (ICE), the bedrock of mobility for over a century, is rapidly being eclipsed by the electric vehicle (EV) powertrain. This transition, driven by environmental mandates, shifting consumer preferences, and technological advancements, presents an existential challenge for legacy automakers in North America and Europe. To survive and compete in this new era, these traditional giants are increasingly adopting a pragmatic, and perhaps strategically necessary, approach: deepening cooperation with the formidable Chinese EV supply chain and technology companies. This strategy is not merely about sourcing components; it is a fundamental recalibration of their global operations, embracing a “China for China” and increasingly “China for the World” dynamic.

The Existential Dilemma of Legacy Automakers

Traditional automakers, such as Volkswagen, General Motors (GM), and Stellantis, face a multifaceted challenge. The transition to EVs is not just a change in fuel source; it necessitates a complete overhaul of manufacturing processes, supply chains, and workforce skills.

Several significant challenges include manufacturing costs, with Chinese manufacturers having a cost advantage; technology gaps, as China leads in battery and software advancements; and declining market share in China due to the growth of domestic companies. Given these challenges, collaboration is often seen as necessary.

Embracing Chinese Expertise

Traditional automakers are partnering with Chinese companies to leverage their EV ecosystem for faster development. This includes securing battery supply and technology from leaders like CATL and BYD, and collaborating on software and intelligent features, such as Volkswagen’s partnership with XPeng for China-specific models and Huawei’s work with Dongfeng. Joint ventures are also shifting, with Western firms acquiring stakes in Chinese EV companies like Stellantis’s investment in Leapmotor and Mercedes-Benz’s investment in a Geely-backed autonomous driving firm.