Car makers use Chinese tech to cut costs

Chinese tech is helping major car brands like Ford, Vauxhall, and Renault save time and money. The number of cars from traditional brands using Chinese tech is set to grow, with Mazda already selling two models based on a Changan platform.

Next year, a Vauxhall model will be built on a Leapmotor platform in Europe, while a Ford model will use a Geely platform the following year. Renault will also use the Geely platform for non-European markets.

The Chinese companies sharing their platforms are not concerned about their tech secrets being compromised, as the technology is not especially innovative. Instead, the competitive edge lies in cost and speed to market.

This approach has already been seen in how Chinese companies build their vehicles, with car makers sharing suppliers and parts to bring down costs. The commonality and speed of the supplier ecosystem reduce the cost of the drivetrain, giving them an immediate advantage over traditional car makers.

The additional speed and lower cost also make Chinese companies appear more advanced, as they can quickly introduce new technologies like battery chemistry, charging technology, or plug-in hybrid drivetrains. The cheaper the tech, the more features they can afford to add, such as massage seats or a panoramic sunroof.

Brand power still matters, but only when combined with the best technology. European premium car makers are struggling in China because they cannot keep up with the latest tech. To remain competitive, all car makers must adopt a similar approach to the Chinese companies, tearing down carefully defended company walls and filling in once-protective moats.

While governments can impose tariffs and regulations, this will only slow the necessary corporate transition. By the time European brands emerge from their tariff stronghold, their brand power might be eroded for good, and they will have to adapt to the new reality of cost and speed being the greater differentiators in the industry.