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BEIJING, June 9 (TiPost)— Head of Huawei Technologies’ smart car business warned of a looming wave of consolidation amid the increasingly stiff competition in auto industry.

Source: Visual China

In 2030, almost 100% of new car sales will come from new energy vehicle (NEW), the sector including the battery electric vehicle (BEV) and the plug-in hybrid electric vehicle (PHEV), and there could be less than five major players in China in the future as fewer and fewer automakers can survive due to the competition, said Yu Chengdong, or Richard Yu, CEO of Huawei Consumer Business Group as well as CEO of Huawei Intelligent Automotive Solution Business Group, at an industry forum opened in Chongqing city on Friday.

Yu expected we will see emergence of consolidation since the small and medium-sized enterprises will be merged into or acquired by the big peer, given the ongoing knockout in the automobile industry. He believes that leading auto manufactures will feel difficult to gain a foothold if they fail to produce 5 million vehicles or even 10 million cars annually.

Yu also forecasted the sector will see Level 4, or L4, autonomous driving can be achieved in 2030, and Huawei will work to commercialize L3 autonomous driving in 2025. He reiterated that Huawei does not build cars by itself, but work as a partner for auto companies to make cars.

Yu’s prediction echoed his remark in April. The executive touted the year 2025 as the watershed for intelligent vehicles. He compared development path of the electric vehicle (EV) sector to that of the smartphone, adding that many phone makers which used to be leaders more than a decade ago had withdrawn from the stage since Apple launched iPhone.

Wang Chuanfu, the chairman and CEO of BYD Co., made the similar warning about competition earlier this week. The auto industry has entered the elimination stage, and the opportunity window period is only three to five years, so it is critical to choose the vehicle model and the technology route to develop, Wang stated at 2022 shareholder meeting for his company on Thursday. Wang said the key to winning the competition is to have the core technology, because the transformation of NEV is essentially a technological revolution. He added that only companies with core technologies can survive, and those with abilities limited to assembly is very unlikely to survive. Wang highlighted the need to quickly make decision. The NEV market just likes a battlefield and it is very unpredictable when the revolution evolves into its late stage, therefore, auto companies could face big problems and collapse if they follow the lengthy decision-making process in the traditional auto market, he explained.

The day Retail sales of NEV rose 60.9% year-over-year (YoY) to 580,000 units in May, the China Passenger Car Association (CPCA) unveiled on Thursday, the day Wang made his speech. NEV retail sales accounted for 33.3% of total passenger cars sold of 1.742 million, representing a 28.6% YoY increase and a 7.3% of monthly increase. While yearly growth somewhat cooled down, NEV sales reversed monthly decline in May. NEV retail sales increased 10.5% from the previous month, compared with a month-over-month (MoM) decline of 3.8% in April.

The China Association of Automobile Manufacturers (CAAM), another auto industry body, released monthly data on Friday. It said auto sales in China increased 27.9% YoY to 2.382 million units in May, up 10.3% from the previous month. NEV sales surged 60.2% YoY to 717,000 units, accounting for 30.1% of the total sales in May. From January to May, the top ten NEV makers by sales totally sold 2.498 million vehicles, up 62.8% YoY. The volume represents 85% of the total monthly NEV sales, 8.3 percentage points more than the same period last year. CAAM said China’s NEV market is still at a period of rapid growth.

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