Chinese carmakers gather steam as innovation thrives, expert says

LONDON - Three Chinese auto brands were among the top 10 most "future-ready" carmakers, reflecting a rise of Chinese players as the industry pivots toward new capabilities, such as chipset design and software, an expert said here Tuesday.

According to the 2023 Future Readiness Indicator for the auto industry, Chinese carmaker BYD snatched up the second position just after Tesla, while XPeng ranked 6th and Li Auto in the 7th place, the famous business school International Institute for Management Development (IMD) said in a report.

"One key finding is the rise of the Chinese players in the automotive industries," Howard Yu, director of the IMD Center for Future Readiness, told Xinhua on the sidelines of the report's launch.

"For the first time, we have three players from China, BYD, Li Auto, XPeng, all making it into the top 10 of our global indicator. It illustrates how quickly the industry is evolving, the kind of new skills that these Chinese players represent," Yu said.

"The Chinese players have done an incredible job when it comes to hard skills, batteries, AI, semiconductors. What is needed going forward is to internationalize their offerings and to understand the different consumer behaviors, from Europe to North America, in order to win market share," Yu said.

The report also showed that while Tesla has retained the number-one spot, competition from China's new kids on the block is heating up.

BYD's rank moved up three places from last year, while XPeng and Li Auto were up six and seven notches, respectively.

Meanwhile, Geely and Nio, two other Chinese carmakers, ranked the 17th and 19th in the indicator.

Yu said automotive companies that develop capabilities like chipset design and software would eventually be the winners.

He added that the strongest auto players, Tesla, BYD and Volkswagen, are innovating in battery-run vehicles, autonomous vehicles and in-house expertise in microchips.

"The industry is at a crossroads. Demand for chips would likely remain highly unpredictable as we see the rollout of technologies like AI, the Internet of Things, and 5G/6G," he said.

The Future Readiness Indicator has been compiled annually since 2010 to assess the world's top carmakers' ability to adapt to future challenges.

The rankings are based on companies' performance in financial fundamentals, investor expectations, business diversity, research and development, early innovation results, and cash and debt.

"Future readiness is really about a balanced scorecard, and this is how we measure it. It's not enough if you have one single hot product," Yu said.

"You need to perform today in order to transform tomorrow. We always tell executives there's never a better time to prepare," he added.