Rising Competition in the Automotive Industry: How Chinese EV Carmakers are Forcing Traditionals to Innovate
Ute Strohmaier - October 26, 2023
The automotive industry is in the midst of a profound transformation, primarily driven by the increasing prominence of electric vehicles (EVs). While established automakers have been making headway in the EV sector, it's the Chinese automakers that are capturing global attention. One such standout is BYD, as featured in an article by NZZ (Neue Zürcher Zeitung). How can OEMs in Europe or North America become more competitive in this rapidly evolving and constantly changing market?
The Chinese EV Revolution
BYD, which stands for "Build Your Dreams," epitomizes the success of a Chinese electric vehicle manufacturer that has gained significant market share not only within China but also beyond its borders. This success is emblematic of the remarkable growth of the Chinese EV industry.
The Chinese government's unwavering support, advancements in battery technology, and an assertive approach to innovation have collectively propelled Chinese EV manufacturers to the forefront of the industry. Consequently, traditional automakers worldwide are facing increased competition.
According to elektroauto-news.net, cumulative sales of all-electric models of BYD for 2023 reached exactly 1,048,413 units at the end of September, an increase of 80.1 percent on the previous year. By comparison, industry leader Tesla has sold a good 1.35 million electric cars so far this year.
Challenges for Traditional Carmakers
Traditional automakers, bound by internal combustion engine capacity, extremely high development costs, and rigid systems and processes, face a daunting challenge to keep pace with Chinese competition. To not only survive but thrive in this rapidly changing landscape, they must become more nimble, adaptable and efficient.
Digitization and Supply Chain Planning Technologies
To overcome these challenges, traditional original equipment manufacturers (OEMs) in the automotive industry are striving for different digitization strategies and trying to become more agile with new technologies. The integration of digital technologies and data-driven decision-making can significantly enhance their capacity to respond promptly to market dynamics, demand fluctuations, production bottlenecks, and global geopolitical events.
Here are key steps to enhance agility and responsiveness:
1. Utilize Cloud-Based Technology for Supply Chain Planning and Optimization: Embrace modern, cloud-based technology for seamless data storage, processing, and accessibility. Cloud infrastructure offers scalability and flexibility, enabling carmakers to adapt to changing needs. Advanced planning software with intelligent solvers using a hybrid of heuristic search and Constraint Programming (CP) can optimize supply chain operations efficiently.
2. Integration of Data: Establish connections between data sources across the organization. This includes data from Enterprise Resource Planning (ERP) systems, Manufacturing Execution Systems (MES), and other critical information platforms within the company. Connecting ERP systems with Sales and Operations Planning and with Logistics Transportation Management ensures a seamless information flow between sales, production, and logistics. This integration enhances supply chain synchronization and efficiency.
3. Data from External Sources: Integrate data from external sources, such as visibility platforms and IoT devices, to gain a comprehensive view of the supply chain and market conditions.
4. State-of-the-Art Technology: Choose cutting-edge technology with features like Kubernetes for container orchestration, ensuring compatibility and flexibility to meet evolving requirements. Select technology that facilitates smooth integration with existing systems and external technologies and platforms, delivering a competitive edge. This includes integrating systems for measuring the company's carbon footprint, a crucial consideration in today's eco-conscious world.
Benefits of Digitization
The adoption of advanced digitization strategies offers numerous advantages to manufacturers:
Real-time Data: Access to real-time data enables informed decision-making and quicker responses to market dynamics.
Reduced Lead Times: Streamlined processes and data integration significantly reduces lead times in production and logistics.
Optimized Supply Chain: Integration of visibility data into planning solutions for transportation planning enhances supply chain efficiency, mitigating the risk of bottlenecks.
Adaptability: Digitization empowers companies to swiftly adapt to external factors such as geopolitical events, enabling agile rescheduling of sales and production plans, scenario analysis, and considering financial aspects.
Climate change is one of the drivers behind the necessary shift to zero-emission vehicles. Nevertheless, the remarkable and swift achievements of Chinese electric vehicle manufacturers underscore the pressing need for a rapid transformation within the automotive sector.
Chinese electric vehicle companies derive their competitive edge from several factors, which include rigorous cost management, cost-efficient labor resources, economical product development through the analysis of established automakers' patents, and robust government support.
For traditional OEMs to navigate this evolving landscape effectively, they must secure greater autonomy to instill agility within their organizational framework. This entails the acquisition of superior supply chain intelligence, coupled with an unwavering commitment to remaining receptive to emerging technologies that can be swiftly assessed and seamlessly integrated. These strategies allow traditional OEMs to achieve a higher level of responsiveness in their business environment, which ultimately gives them a competitive advantage in the dynamic automotive industry.
If you want to learn more get your Guide "Why the cloud is the future of manufacturing"
In this Guide you will learn:
New potential of cloud-based manufacturing
Opportunities of the cloud for the production
Technological advantage of flexis technologies
- The Vital Role of Advanced Planning and Scheduling in Manufacturing Excellence
- Logistics Success Story: Building a Better TMS in the Cloud
- Retaining Top Talent: The Strategic Role of Supply Chain Planning
- Rising Competition in the Automotive Industry: How Chinese EV Carmakers are Forcing Traditionals to Innovate
- How Can Cloud Platforms Support Supply Chain Management