Yet, the struggle between domestic and foreign automakers is far from over.
With the strength of 4 million annual new energy vehicle (NEV) sales, BYD has outpaced joint ventures and traditional ICE automakers, positioning NEVs to overtake ICE vehicles in China’s market.
In a world where NEV development lacks proven precedents, BYD has carved out a unique advantage, becoming a driving force behind the global transition to NEVs.
BYD’s Dual Strategy: Driving Growth in NEVs
BYD has demonstrated that NEVs can achieve rapid growth via two technological routes: plug-in hybrids and pure electrics.
It has also proven that NEV companies can join the ranks of global top automakers and operate profitably. However, this success has come at an immense cost, particularly when confronting the entrenched power of multinational corporations.
Recently, BYD’s request for a 10% price reduction from Sensata Technologies, a century-old American parts supplier, ignited industry-wide debate.
This reveals not only the challenges BYD faces on its path to becoming a global leader but also the uphill battle that Chinese automakers must endure to compete on the world stage.
While Tesla, BYD, and a few others are thriving, most NEV companies are still grappling with losses or exiting the market altogether.
Negotiating annual supply prices between automakers and suppliers is standard practice, and BYD’s 10% reduction demand is well within reason. This situation sheds light on the stark survival disparities between domestic and multinational automakers.
BYD Exposes a Painful Truth
This controversy has exposed the reality of multinational companies extracting high profits in China.
Sensata Technologies, the focus of recent debates, boasts profit margins consistently above 30%, peaking at 38% in 2023—figures unimaginable for China’s local supply chains.
This disparity underscores the vastly different conditions domestic and multinational companies face in the same market.
While most automakers struggle with losses and layoffs, multinational suppliers enjoy profits far exceeding industry norms.
For years, domestic automakers have endured thin margins, effectively “subsidizing” multinational suppliers.
The high costs of essential components like batteries turned NEV makers into "workers" for their suppliers, a reality that highlights the historical imbalance in China’s automotive industry.
From brand licensing and technology imports to manufacturing equipment, foreign automakers and their supply chains have reaped significant rewards, while domestic automakers were left marginalized.
The Rise of Independence
However, with growing sales and brand influence, companies like BYD, Chery, and Great Wall Motors have embarked on paths of self-reliance.
They now develop everything from powertrains to key vehicle components in-house. The era when multinational automakers and suppliers dictated terms in China is over.
BYD, as the global leader in NEVs, has taken a bold step to "clean house." By rejecting excessive supplier profits, it seeks to reclaim control over pricing and the broader supply chain.
BYD’s 30-year history demonstrates that when suppliers fail to meet its expectations, it’s willing to build an alternative, domestically developed supply chain as a model for others to follow.
A Familiar Story for Multinationals
BYD’s push for cost reductions and localized replacements mirrors strategies once employed by multinational automakers during their rise.
The global automotive industry, with its century-old barriers of technology and patents, continues to pose challenges for China. But after 70 years of steady progress, Chinese automakers are now reaching a pivotal moment of self-reliance.
BYD has reversed the tide with its cross-industry expertise in NEVs, while Chery, China’s top auto exporter, has achieved full independence in traditional ICE technologies like engines and transmissions. This marks a significant shift in global automotive markets, as Chinese automakers begin to assert pricing and strategic autonomy.
What was once an unavoidable reliance on expensive imported components is now giving way to more equitable partnerships. Multinational suppliers are no longer untouchable, and a new era of balanced collaboration is emerging.
Toward a New Global Order
The resilience of Huawei in the face of global sanctions serves as inspiration. By achieving independence in semiconductors and operating systems, Huawei paved the way for China’s broader tech autonomy.
In the automotive industry, BYD’s breakthroughs in batteries, electric motors, and semiconductor development reflect a similar trend.
As more Chinese automakers pursue localization strategies, their competitiveness and influence on global markets continue to grow. The recent EU tariff drama targeting Chinese automakers underscores the urgency of this shift.
Whether BYD’s 10% price cut will succeed remains uncertain. But one thing is clear: localization is a long-term process, and multinational suppliers still hold key advantages.
Yet, BYD’s bold stance against entrenched profit-taking marks a turning point, powered by growing global recognition of Chinese brands.
As multinational automakers lament the challenges of China’s market, they must recognize that their era of effortless profits is over.
Now is the time for true partnership and collaboration with Chinese automakers.
The era of exploitation has ended, and China’s auto industry will no longer be dictated to.（Translated by ChatGPT）
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