On April 27, Zhang Yongwei, Vice Chairman and Secretary General of the China Electric Vehicle 100 Association, had a dialogue with Gao Le, President and CEO of the BMW Group in Greater China.
They talked about a very interesting topic - the electrification transformation of car giants. The whole Q&A is of very high quality, and here you can see:
In China's automotive electrification transformation, why do multinational companies look half a beat slower?
Will multinational companies eventually adopt a conservative strategy because they are too focused on the balance between traditional fuel vehicles and new energy vehicle businesses?
Can the brand advantages established in the era of fuel vehicles naturally extend to the era of electrification? How do I reposition my brand?
How do you view China's new generation of consumers? How can mnEds adapt?
Europe is electrifying fast, will it surpass China?
There are more and more brands in the intelligent electric vehicle industry that have proposed the "full-stack self-research" route, what does BMW think about this?
(The following is slightly deleted without changing the original meaning)
China's automobile electrification transformation, multinational enterprises slow half a beat?
Zhang Yongwei: I would like to ask Mr. Gao Le, how do you view the development of China's electric market industry, including the transformation performance of multinational companies in China?
Gao Le: First of all, congratulations to China, because China is the driving force for the breakthrough of electric vehicles (in the world), it is clear that China has opened up such a path and become the world's number one new energy vehicle market, last year (China) sold 3.5 million new energy vehicles, penetration rate of 13%-14%, which is a very remarkable achievement, but also inspired the markets of other countries such as Europe.
Now this market is shifting from policy-driven to consumption-driven, so that consumers are interested in buying new energy vehicles, which has entered the second stage, so we see that the market share of new energy vehicles is now further increasing.
Speaking of different market players we have to look at the segmentation of the market, last year's new energy vehicles in (China's) market accounted for 13%, 87% (market) is not yet a new energy vehicle, this is a huge market, many car companies are working here, including BMW, looking forward to the future 2025 China's new energy vehicles accounted for about 25-28%, which means that there are still 75% of the market is not new energy vehicles, even by 2030, the proportion of new energy vehicles may be able to 50% 60%, there are still 40% of the market Not new energy vehicles, many car companies such as BMW will take into account the two areas of (fuel vehicles and new energy vehicles) at the same time, and new forces they do not do both, they only work in one area.
You may say that we are slower, the performance is not so good, I have different views, we can now say that the performance in such a huge market segment is very good, and also launched a lot of new energy models, we also have a good performance in the growing field of new energy vehicles, and the biggest difference between the new forces is that they only do new energy vehicles or even only pure trams.
We need to understand the development process from fuel vehicles to new energy vehicles, and then to the intelligent networked car, it can be said that the concept of intelligent networked vehicles is the ultimate car created in China, because it is electric sustainable intelligence at the same time digital, it can be said to be an ultimate travel scenario, in order to win in such a market, we need a very many types of talents, not only batteries, digital capabilities, but also to understand the sustainable development of the circular economy, while managing the cost of raw materials To succeed in such a field of intelligent and connected vehicles, we need to have a variety of capabilities.
Now each manufacturer has its own strengths, new forces like Xiao Pengweilai, they are indeed very strong in digitalization and some intelligent networking. Most Chinese car companies or new forces are still only doing in China, only specializing in this single market, if you want to "go global", you have to deal with different certifications and different regulations, deal with complex situations including production supply chains, including the management of global supply chains and rapid promotion of digitalization, which requires strong capabilities in many aspects.
Among the existing car companies, not all of them can enter a new stage, you will see some car companies will withdraw from the market, and you will also see some new forces will succeed. Of course, not all will succeed.
BMW is already in an advantageous position BMW began its new energy journey in 2013, when most of the new forces have not yet entered the market, i3 and i8 are the representative models at that time. In 2021 we sold the 1 millionth new energy vehicle, by 2025 will sell 2 million, we are synchronized with the market, we expect that the market share of electric vehicles in 2030 will reach 50%, when 50% of BMW's sales target will also be electric vehicles.
In some markets, electrification is not as fast as in China, for example, in some places the infrastructure is not perfect, so [the speed of electrification] will be slower, like you said this is a marathon run, if you are recognized as the leader within 5 kilometers, it does not mean that you can win the final victory.
Multinational companies electrified conservatively?
Zhang Yongwei: A company like BMW needs a balance, on the one hand, it needs to vigorously develop the business of traditional fuel vehicles, because it is a cash flow business, on the other hand, it must develop electric vehicles, but this balance will not be too chasing the balance, in the electrification, its speed is still relative to the conservative strategy in the back, not like the new forces we said, because he has no hesitation in only this one thing, and then it will run faster and faster.
Gao Le: BMW actually achieved the right balance. There are still a large number of customer groups hoping to have new fuel vehicles, and our investment in electrification, battery management, and digitalization can be said to have accounted for the majority of the entire investment, so now BMW is forming a good balance.
China is a leading market for BMW, second only to its German headquarters in Munich. We have our own digital services company,we have our own R&D network, we also have a battery assembly line in Shenyang and so on, so I'm very confident that we have the ability to compete in this space.'"
Zhang Yongwei: BMW is a global company, in the era of fuel vehicles, there is no such company in China, in the era of electrification, from your point of view, such as our new power companies, are now slowly starting to go international, will one day produce an international multinational automobile company in China?
Gao Le: I have to sincerely appreciate some Chinese brands, because the automotive industry is very complex, and I have to say that many chinese automakers and brands are doing very well, very creative, I am very happy about this, and I am happy to see it come to fruition, because in fact, competition needs to have good opponents. Because competition is good for business.
So there are some companies that I believe have the potential to really become global, and from a technical point of view, the key point is that Chinese companies need to focus on brand building.
I've lived in China for a long time, and I have to say that some products, some brands are actually very good, but consumers don't always buy products rationally, they are sometimes very emotional, so I think good products need to be accompanied by a very strong brand.
Take one example, Huawei phones. I think it's as good as the iPhone, but in the global market if you ask consumers, people will think Apple is better, this is likely to be the answer you will get, but from a technical point of view, although I am not a mobile phone manufacturing expert, but maybe Huawei is also very good, so the product is good, but also need to do the brand.
In the era of electrification, how to reposition the brand?
Zhang Yongwei: In the era of fuel vehicles, we feel that BMW is a relatively high-end international brand positioning in the world, and at that time, everyone had a complete set of definitions of the connotation of fuel vehicle brands. When it comes to electrification, consumers may change their brand perception of electric vehicles, and at this time they encounter a problem: can the brand advantage established by BMW in the traditional fuel vehicle collar be naturally extended to electric vehicle products, in the era of electrification, how do we rethink the problem of brand positioning?
Gao Le: First of all, let me look at the needs and expectations of customers for the brand in the new era, it is also a new chapter, some things may not change, such as design, safety.
Zhang Yongwei: There must be something that has been continued.
Galler: Yeah, that's why I think BMW's brand is very strong in these areas, and we're investing heavily in digital and other areas right now. Another point that I find very important is circular economy sustainability and cost management.
If we look at what is happening now, the cost of raw materials is actually soaring, and the cost of batteries is soaring, and the price of most supply chains is going to increase, so this means that there are two important points in the future.
First, from the perspective of cost management, you need to be able to recycle, to have a closed cycle, that is, to produce and sell these new energy vehicles, and then recycle, which is the only way to reduce costs, which requires a lot of technology, BMW already has these technologies.
The second is sustainability, under China's "30, 60" carbon neutrality target, users will be aware of the sustainability of enterprises, carbon footprint and so on. Consumers' existing reasons for buying a car will be passed on to the new energy field, and there will be other elements, and the brand is to integrate all the factors together and convince most people at the same time, so that the brand will be successful. When I look at all these factors, I think BMW has done a good job
How can mnEds adapt in the new era?
Zhang Yongwei: How do you view China's new generation of consumers? How do multinational car companies like BMW Volkswagen adapt? If China's consumption changes rapidly and its acceptance of new things is very high, does it mean that many new technologies will be applied in China in the future? Does it mean that these new things in China will become a leading consumer in the world, and this judgment does not know whether it is established or not?
Gao Le: The Chinese automotive industry has really made remarkable progress, 10 years ago it was made in Europe, sold in China, then produced in China and sold in China, then created in China (R&D), sold in China; now it is progressing to creating in China and serving the global market. This is what is happening now (not yet fully realized).
You can see that due to many factors, creation is happening in China. The first is the Chinese consumers, who are much younger than European and American consumers, more proficient in technology and more curious, want to try new things, which leads to the hope that everyone hopes to have a novel design, advanced technology, perfect in-car ecosystem, which is the difference between Chinese car users and European users, which is why BMW has the most digital services and autonomous driving research and development in China.
China has led in many aspects, such as voice, voice control is not very popular in most parts of the world, but in China everyone obviously has this demand. In addition, there is your car ecology, sometimes you sit in the car for a while after driving to watch videos, which is difficult to see in other markets, it can be said that the way to use the car is very different, the demand for the car is not the same, which is why we have to meet these needs.
The same is true for the design. Many people in Europe and the United States will "repeat the purchase". For example, the most popular in Germany is the 3 Series, some customers may buy 3 sets of 3 Series in a row, they do not want to change, but when there is a change in (design), they will complain, will say "why should I replace my 3 Series", but many people in China have purchased the 3 Series, but in the next car will be replaced by M5, so in China everyone likes to seek innovation and change, which has a lot to do with culture.
In Chinese culture, rapid change is part of our lives. But if you go to Munich, it's basically the same as it was 40 years ago, nothing has changed. The environment is different, which also affects the taste and needs of customers. We see such special needs, and these rapid changes affect us.
What is happening in China now, such as digital voice control autonomous driving and so on (changes), these will lag behind in other countries for several years, and any car company that wants to succeed needs to have strong research and development capabilities in China, such as BMW.
Zhang Yongwei: What do you think the future car company should look like?
Gaulle: It's a $1 billion question. First look at the previous business model: selling a car, there is a profit bonus, there will be after-sales income, this is your business model, after the car is sold, it is not related to you. But the source of income has changed. The car itself is still a certain profit, but due to the interconnection of the car and digital services, this has created a new business model, and car companies can profit from it.
I don't believe that there is a car manufacturer that can be like a mobile phone manufacturer, such as a German mobile phone manufacturer who will send mobile phones for free. Then make a profit from the services behind.
Just now, you also asked car companies which businesses to do themselves, which to hand over to third-party companies. For example, Map already has three or four professional companies in China, so Map BMW will not develop itself.
In addition, charging, in the era of fuel vehicles, we did not go to build self-built gas stations, and I think in the era of electric vehicles, we should not go to self-built charging stations. China has various power grid companies such as the State Grid, and I am not particularly supportive of some of the current practices: that is, each car company is building its own charging pile. For example, you can see 6 kinds of charging piles in the shopping mall, but you as a customer can only choose 1 of them, which is not right, there should be a unified charging network, and then you go to pay for it.
In the future, BMW will focus on creating the most attractive models, and we will strive to improve the digital services in the car, but also have system integration capabilities, such as batteries. Batteries such as Catheera, Samsung, etc., they are experts in battery design, what we have to do is to cooperate with them to optimize the battery cell to better configure our battery system, so why should we produce our own batteries?
We are very careful not to try to do everything and end up losing our focus.
Europe is electrifying fast, will it surpass China?
Zhang Yongwei: Europe is electrifying very quickly, will it surpass China? What do you think about this?
Gao Le: I think the current situation in Europe is still mainly policy-driven, which is basically similar to the initial stage of China.
Why I say this, because Europe currently has two big levers, the first is the European Commission carbon emissions plan, the OEM fuel consumption requirements are very strict, OEMs are forced to reach 50% by 2030, 60% are pure trams, which is policy-driven; secondly, if you buy an electric car in Germany, you may get 7-8 million yuan, very high subsidies, because some users in Europe are very conservative.
Compared with Chinese users, we launched a survey: 70% of Chinese under the age of 40 are willing to buy electric vehicles, if the same survey is conducted in Europe, this proportion has dropped a lot, Europe currently needs subsidies, the government pushes, until they naturally accept electric vehicles, which is why you can see that the sales of new energy vehicles in Europe have also increased a lot.
Secondly, a large proportion of these new energy cars in Europe are plug-in hybrids, while 80% of China's 90% are pure electric vehicles, and at least more than 50% of them are plug-in hybrid vehicles in Europe. Because people are very entangled in both electric drive and mileage anxiety plug-in hybrid vehicles can take both, you can drive 200 kilometers pure electric, but if you want to drive to Italy, you need to have a longer mileage, and there are internal combustion engines that can be used, so the markets of various countries are not the same.
So, in terms of pure electric vehicles, especially when it comes to ICVs, it is the intelligent networked car above, I think China is still leading, this transformation has happened, in the next two or three years you will see a lot of new energy cars listed in China.
Take BMW, for example, we have i47s and so on, every car is going to be pure electric, and that's what our competitors are doing, and customers will have a lot of options. You're right, Europe is catching up now, but it's mostly driven by policy now, not by customers.
Zhang Yongwei: This goes back to what I talked about at the beginning, now it is still a marathon, whether it is for the main body of the market, whether it is for this kind of competition between countries around the world, in fact, it is far from the point where no one is the final winner.
So whether it is China or Europe, whether it is BMW or new forces, whether we do electrification or intelligence, I think everyone has the same goal, but no one has a reason to relax, no one has a reason to slacken off, and the road ahead is still very long.
For the "full stack self-research", what does BMW think?
Gao Le: First we need to clarify exactly what we mean by "technology stack". When we look at this car ecosystem and operating system, in general, there are two parts, the first is about the functions of the car, operating system, energy management, brakes, these are obviously what we need to control. Then there are other features, different layers of the so-called "technology stack", that can be added to the system, such as speech recognition capabilities, or some advanced driving performance, and so on.
In general, I don't think these features necessarily need to be developed in-house. So we keep saying that the operating system of our own cars must be developed by our BMW itself. Now we're moving to An Android-based operating system, and we're going to integrate some of the features from third parties, some of the "technology stacks" at different levels, but the operating system is our own, and we've been doing that since the digitization of the vehicle.
So the question is not absolute, I don't believe that OEMs have the ability to develop every part of the car, but the operating system has to be developed by ourselves, owned by ourselves.
And it's also very important, and sometimes a misconception, even if some people think that some vendors are "full stack", you can look at things like speech recognition, navigation and other features, they are also using the same components as us, so you have to figure out what the technology stack you define is.
For example, Tesla, they are making a Linux-based operating system, we have our own ecosystem, the technology stack is based on the Android system, but will integrate various functions, such as Baidu map or other map functions, which are in the market Many manufacturers are operating in this way, so sometimes this concept may be a bit confusing.