(Bloomberg) -- Slowing demand for electric vehicles, heightened trade tensions and questions about whether Western legacy automakers can interest Chinese consumers have been the talk of Beijing as executives from top global car marques descended on the capital for the Auto China show. 

Volkswagen AG leads the charge for foreign brands, showcasing 44 models — half of them EVs — while Mercedes-Benz Group AG just unveiled its electric G-Class SUV and BMW AG will display one of its latest concept cars. The German carmakers are looking to win over customers in China, where their market share fell to its lowest in six years in the final quarter of 2023, though there has been a slight rebound in the first two months of this year. 

Read More: VW, BMW Out to Prove They’re Not a Spent Force at China Car Show

Clawing back lost ground won’t be easy. Chinese drivers typically prefer tech and gadget-laden cars from domestic manufacturers, most notably BYD Co., that can respond to local-language voice commands and link to local social media.

The stakes are high. China is the world’s biggest car market, but it’s becoming increasingly cut-throat as manufacturers discount heavily and growth slows from the rapid rate of recent years. At the same time, China’s globally dominant EV industry is at the heart of growing trade tensions with both the US and Europe, making the home market even more important for domestic manufacturers.

Key Developments

  • Volkswagen to Face Investors Skeptical of China Turnaround Plan
  • Mercedes’ Electric G-Class Plays It Safe Amid Slacking EV Sales
  • Polestar Joins EV-Tech Crossover With Made-for-China Smartphone

(All times Beijing)

Lotus Says Demand Is Holding Up (5pm)

Lotus Technology, the luxury sports car brand backed by Geely, said it wants to sell 20,000 vehicles in 2024, up from the 7,000 it sold last year. 

The Nasdaq-listed company’s Chief Financial Officer Alexious Lee said the luxury segment of the car market — vehicles that cost more than US$80,000 — has seen very low EV penetration because supply is limited and there aren’t a lot of offerings from heritage brands in this space.

Lee said that the company isn’t facing a weakening in demand, like the sector more broadly. “We haven’t felt a slowdown in demand, rather our orders and sales are doing well,” he said.

BYD Shows Why It Beats Competitors (4:45pm)

For an idea of how BYD has come to dominate the global EV market, look no further than how quickly it can turn a concept into mass production: as little as 24 months for something like the Denza Z9GT, according to chief designer Wolfgang Egger.

It’s dramatically faster than major Western carmakers. Mercedes-Benz used to develop a new model in 58 months, though it managed to bring that down to 50 months with the E-Class. In future, the luxury German brand has its sights set on something closer to 41 months, according to Chief Technology Officer Markus Schaefer.

Mercedes Says Watch For China Consolidation (4:30pm)

Mercedes’ Chief Executive Officer Ola Källenius predicts China’s EV industry may be facing a bout of consolidation that could last until 2030. 

“Many Chinese startups are currently burning cash, and you can only sustain that for a limited amount of time,” he said during a roundtable talk. “There will be a consolidation round within the next five to seven years.”

He also ruled out the idea of cooperating with new Chinese EV brands in order to lower production costs. Mercedes will stick to making all-electric cars for the upper segments of the market and will steer clear of the entry-level sector, despite the latter’s high volume growth, he said.

CATL’s Quick Battery Upgrade (3:23pm)

Less than a year after unveiling a fast-charging, long-lasting electric vehicle battery, industry giant Contemporary Amperex Technology Co. Ltd. is back with an upgrade.

Its Shenxing Plus battery pack can power a car up to 600 kilometers from just a 10-minute charge, the company said at the Auto China show in Beijing. The lithium-iron-phosphate battery is capable of 1,000 kilometers of range on a full charge. 

The new battery is an upgrade to the Shenxing, which was just announced in August. That version can power a vehicle 400 kilometers from a 10-minute charge or up to 700 kilometers on a full charge

Xpeng Seeks to Gain Europe Foothold (2:37pm)

Xpeng Inc., which partners with Volkswagen to develop China-tailored products, still wants to gain a foothold in Europe despite the bloc’s ongoing probe into Chinese EV subsidies. 

The company said it aims to deliver tens of thousands vehicles to the European market this year, which would account for about 10% of its global sales, and represents at least a 10-fold increase from last year’s number, President Brian Gu said. “In the event we need to localize manufacturing, supply chain, and any other areas to compete, we have to do that,” he said.

The company is also involved in the drafting of assisted-driving related standards in the European Union through forums and discussions and expects some clarity around the regulations at the end of this year at the earliest. The company could be among the first batch of certified operators, though Gu said its L4 level autonomous driving or robotaxis are still more than five years away.

Xpeng is also eyeing profitability by the end of 2025.

Mercedes Wants China Tech Relationships (2pm)

Mercedes-Benz is steering away from more collaborations with Chinese car manufacturers and instead focusing on teaming up with local tech companies.

“We need to line up with tech and content partners in China,” the carmaker’s chief technology officer Markus Schaefer said at the show. Mercedes announced Thursday that it will partner with Tencent Holdings Ltd. and Electronic Arts Inc. to integrate the iconic ‘Need for Speed’ video games into certain models in China.

Foreign Brands Can’t Keep Up (11:50am)

Foreign automakers aren’t set up to compete in the China market as electric vehicles take hold, said Bill Russo, founder and chief executive officer of Shanghai-based advisory firm Automobility.

Electric models from Chinese tech companies crossing over into the car market, like the Huawei-partnered EV brand Aito and Xiaomi’s offering are seeing sales surge, which is only exacerbating excess inventories of gas-powered vehicles, he said in an interview with Bloomberg Television. The market for gas cars shrank by 10 million units in the past few years; meanwhile, discounts in the EV price war are “shrinking the ICE lane even more,” he said.

“In China, people are shopping for a different kind of product, and the traditional companies just don’t make those kinds of products,” he said. “The way out is to figure out how to bring that ecosystem and mindset into your company, and start by doing that here.” 

Aion IPO Still Up in the Air (11:42am)

State-backed Guangzhou Automobile Group Co.’s EV brand Aion is working on an initial public offering, but it’s unclear when it will proceed. 

“The stock markets are doing terribly,” said President Gu Huinan. “We’re still looking for the right opportunity to go public.” 

Great Wall Eyes Up Europe Growth (10:55am)

Great Wall Motor Co., the maker of Haval SUVs and the ‘Ora Funky Cat’ EV hatchback, will target Europe as its top market for overseas growth in the coming years, Parker Shi, head of international business, said in an interview with Bloomberg Television on the sidelines of the show.

The company, which has been pouring money into R&D for electric vehicles to compete in the Chinese market, will rely on multiple powertrains as it seeks to expand its share in Africa, the Middle East and Latin America, where it has long had a presence, Shi said.

He downplayed the challenge of tariffs and protectionism facing Chinese auto exports, saying translating its products for different cultures is the first priority. “We are confident in our product, because we have too many models, too many powertrains, ICE, PHEV, to offer our local consumers,” he said.

BMW Plans More China Investment (10:45am)

BMW executives said the carmarker remains firmly committed to the China market and, since 2010, has invested 105 billion yuan in manufacturing facilities and research and development centers in the country.

“Preferences of Chinese customers flow directly into the development of BMW cars,” Chief Executive Officer Oliver Zipse said. 

The company will build its upcoming Neue Klasse EVs in China from 2026, and plans further investments in the country for local production. BMW is going to introduce 20 new and updated Mini and BMW models in 2024 in China, and it expects car sales in China to grow slightly this year.

Mercedes Bets on In-Car Fun (10:36am)

Mercedes-Benz used its presence at the show to stress that it hadn’t fallen behind Chinese counterparts when it came to electrification — or quirky in-car features.

The company unveiled a battery-powered version of its high-end off-road G-Class, showing off its mountaineering ability by backing up a steep slope on stage. All of the company’s models are now available in electric versions, the company’s Hubertus Troska said at the event. “We are all in to build the most desirable vehicles of the electric era,” he said.

The company also showed off some of the fun features that its Chinese peers have become famous for in recent years, including in-cockpit gaming and a stereo interface that more closely resembled a professional DJ booth, the latter introduced by Black Eyed Peas rapper Will.i.am.

Denza Debuts New High-Tech Car (9:50am)

BYD and Mercedes’ premium sub-brand Denza is among the first out of the blocks, unveiling its newest electric model: the Z9GT, a shooting-brake style design with a heavy emphasis on technology. 

The car, the third in the company’s growing luxury line up, can go from 0 to 100 kilometers an hour in two seconds. The brand, which sold over 100,000 electric and hybrid vehicles in 2023, is also looking beyond China with plans to expand into Europe in the fourth quarter. 

VW Wants to Woo Chinese Buyers (8am)

Volkswagen will start sales of a new electric-vehicle brand in China — the ID.UX — with gadgets like an in-car avatar to help win back young buyers. The sub-brand’s first model ID.UNYX will go on sale this year in China only.

After leading in China for decades, VW has been caught wrong-footed on EVs where local brands dominate with 84% market share according to data compiled by Bloomberg. 

Other models on show by the VW Group in Beijing include a long wheelbase version of the electric Audi Q6 e-tron and a version of the Porsche Taycan tailored to China. 

--With assistance from Dan Murtaugh, Gabrielle Coppola, Stephen Engle and Luz Ding.

(Corrects car model in ‘Foreign Brands Can’t Keep Up’ section of story published April 25.)

©2024 Bloomberg L.P.