From following and learning to developing and leading, riding the wave of new energy and intelligent technology, China has established the world's most complete new energy vehicle industry system and gained the initiative in the restructuring of the global automotive industry landscape. However, the numerous risks facing the automotive supply chain still cannot be ignored.
On November 21, Zhang Yongwei, Chairman of the China Automotive Industry Association, stated at the Intelligent New Energy Vehicle Supply Chain Innovation Conference that China has become the center of the global incremental automotive supply chain, and power batteries, chips, and software will become the focus of future supply chain competition. However, it should be noted that there is great uncertainty in these three areas.
Wei Chenping, deputy general manager of the purchasing center of JAC Group, expressed a similar view: "The stability and resilience of the supply chain have become a core competitiveness that transcends efficiency, and are related to the initiative in industrial development and security. A series of issues such as chips and power batteries will have a great impact on the supply chain."
China's power battery industry leads the world, so why is it considered an uncertain factor in the supply chain?
Zhang Yongwei believes that the rapid iteration of power battery technology may pose significant challenges to the supply chain. He explained that currently, liquid batteries are still in a period of active innovation, while solid-state battery research and development is also making continuous progress. The most optimistic expectation in the industry is that solid-state batteries can achieve small-scale industrialization by 2027. "This accelerated technological innovation means that for the supply chain, the huge automotive power battery production capacity we have built up in the past technology stages may become outdated capacity due to technological iteration."
In addition, other countries are also trying to establish an independent and controllable power battery supply chain, which means that the global battery production pattern may undergo a huge change. Some important upstream resources, such as lithium, cobalt and nickel, are concentrated in the hands of a few countries. These factors have jointly made batteries the most important part of the automotive supply chain.
Regarding chips, Zhang Yongwei stated frankly, "Recently, the entire automotive industry has once again begun to pay close attention to the security of the automotive chip supply chain. Once a 'chip shortage' occurs, the consequences are predictable: even the lack of a small chip costing 2-5 yuan could prevent an entire vehicle from being launched on the market. Building a secure chip supply chain must be a routine task."
Huang Hongcheng, deputy director of the Institute of Intelligent Vehicles at Shanghai Jiao Tong University, also pointed out that China's automotive chip industry is rapidly rising, especially in the field of high-difficulty automotive computing chips, where companies such as Horizon Robotics, Huawei, and Black Sesame Technologies have become important supporting forces. However, most of the domestic substitution efforts of Chinese chip companies are concentrated in the design stage, and there are still challenges in production and manufacturing.
Zhang Yongwei added that a car has hundreds of different types of control chips. These small chips involve power, electronics, communication and other aspects, and their safety is not optimistic. Some types have not even started to be produced domestically.
Regarding automotive software, Zhang Yongwei pointed out that although the value of an automotive operating system is small, the cost of switching is huge. "In the past, our computers and smartphones have all gone through a development stage where they relied on others for their operating systems. Therefore, whether automotive operating systems can be independently controlled from the beginning is something that automotive companies and parts manufacturers should pay close attention to."
Chen Kunlong, Director of Strategic Planning at China Automotive Innovation, believes that the key to China's automotive industry moving from temporary leadership to sustained dominance lies in its ability to collaborate with upstream and downstream players in the industry chain to break down data barriers and strengthen software technology. He noted that recently, traditional manufacturers such as Mercedes-Benz, BMW, and Volkswagen have formed software and hardware alliances with companies like Bosch. Notably, they have invited companies like Nvidia and Qualcomm to join, aiming to create a "chip + operating system" alliance to build technological barriers. While this has not yet formed a true industrial advantage or technological barrier, it deserves the attention of the entire industry.
