![]() ![]() Advanced electrical and electronic (E/E) capabilities, such as advanced driver-assistance systems (ADAS) and over-the-air (OTA) software updates, and the ability to make design upgrades during the vehicle life cycle are becoming crucial to remain competitive, both in China and globally. The rapid pace of innovation and frequent technology leaps, especially in software, are shortening of the development cycle for BEVs.While international players are strengthening their technology position, they also need local ties to realize additional opportunities. Chinese OEMs still have a natural advantage here. A local battery ecosystem is critical to securing the right specification for the market at the right price point.International players must consider trade-offs between global platform scale and local optimization to compete in China (and other major markets). With China representing about 50 percent of the global BEV market, OEMs with a presence there must increase their value to customers and find cost-saving opportunities by designing vehicles to meet local requirements.OEMs that do not offer similar capabilities may lose ground-first in China and eventually globally. These technologies require a solid foundation in software, electronics, and local ecosystems for applications and services. Strong human–machine interfaces (HMIs) and connectivity differentiate them from the competition. Chinese OEMs lead in providing a superior customer experience to local consumers.As they strive for improvement, OEMs will gain more by focusing on vehicle- and system-level collaboration, rather than the traditional, siloed approach in which they try to optimize individual components. By contrast, our benchmark shows that OEMs have the potential to reduce costs in e-powertrains by double digits relatively quickly. With combustion engine vehicles, such improvements have always been important, but they tend to occur incrementally over long periods. OEMs still have the opportunity to increase efficiency significantly across vehicle systems, especially in the e-powertrain.In summary, our work revealed the following major areas of insight: To gain additional insights that reflect the growing competition, we expanded our original benchmark analysis to include two additional BEV models that were specifically developed by international OEMs for the Chinese market (see sidebar, “About our benchmark”). ![]() In a previous article, we benchmarked ten popular Chinese BEVs in a detailed technical analysis that also provided cost estimates for individual components. International OEMs, which are accustomed to serving other markets, may find that some of their most popular features carry less weight in China. ![]() Chinese OEMs also have a head start because they understand local customer preferences and have designed their vehicles to suit them. How will these “newcomers” succeed? While international OEMs have many advantages and a long record of producing quality cars, they may find obstacles ahead because Chinese automakers are part of a well-established local BEV ecosystem, characterized by battery and electronics expertise and a strong focus on a fast time-to-market. This article was a collaborative effort by Clemens Dabelstein, Philip Schäfer, Dennis Schwedhelm, Jingbo Wu, and Ting Wu, representing views from the McKinsey Center for Future Mobility. ![]()
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