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Global automakers seek Chinese tech to overcome EV

development

hurdles

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US, European brands explore global models on Chinese

platforms

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Concerns over long-term reliance on Chinese EV technology

SHANGHAI/MILAN, Sept 11 (Reuters) - When Audi executives

first saw the Zeekr 001 in 2021, a long-range electric vehicle

with European aesthetics, it was a wake-up call for the premium

German auto brand - if it wanted to compete with the Chinese, it

needed their technology.

"The Zeekr 001 back then shocked quite everyone," said

Stefan Poetzl, president of SAIC Audi Sales and Marketing. "We

needed to do something about it."

To boost its EV lineup for Chinese consumers, Audi built the

AUDI E5 Sportback in just 18 months using technology provided by

Chinese partner SAIC, including batteries, electric powertrain,

infotainment software and advanced driving assisted systems.

Audi expects to start delivering the $33,000 EV to customers

in China this month and its global rivals are now also looking

to use Chinese intellectual property to roll out new models

rapidly. Toyota and Volkswagen have joint development plans for

China-dedicated models with technology from Chinese partners GAC

and Xpeng ( XPEV ), respectively.

Renault and Ford want to go one step further and develop

global models on Chinese EV platforms, sources said. Renault did

not respond to a request for comment. Ford declined to comment.

Such licensing deals make up relatively small but growing

revenue streams for Chinese EV makers and, for now, offer a new

quid-pro-quo.

Global automakers need Chinese technology to leapfrog

development hurdles and launch new EVs quickly. Meanwhile,

Chinese companies desperately need additional revenue amid a

bruising price war at home and intensifying trade war abroad.

"It is a very smart, win-win solution," said Will Wang,

General Manager of Shanghai-based consulting firm Autodatas,

which provides teardown reports of best-selling EV models.

'CHINA INSIDE'

This new strategy resembles the "Intel Inside" campaign of

the 1990s - where U.S. chipmaker Intel used state-of-the-art

components to transform computers into premium products.

In this case, Chinese automakers sell EV technology in a

box: the underpinnings for ready-to-build, white label

battery-powered cars suitable even for low-volume manufacturers

with small budgets.

Leapmotor has partnered with Stellantis ( STLA )

to sell its EVs outside China and is talking to other brands to

license its technology, CEO Zhu Jiangming told Reuters.

Using a ready-made Chinese EV chassis and software could

save billions of dollars and years of development time and help

traditional automakers catch up with Chinese rivals, auto

industry experts say.

Renault was an early adopter, building the

low-cost Dacia Spring EV on a platform from China's Dongfeng for

sale in Europe starting in 2021.

Renault has gone one step further with the new electric

Twingo under development at its research centre in Shanghai,

with a Chinese EV engineering firm Launch Design providing

technical support in developing an EV platform, according to two

people familiar with the matter.

Launch did not respond to requests for comment.

Other "China Inside" models could be coming soon. Ford is

seeking a Chinese partner to provide EV platform technologies,

said two people with knowledge of the matter. CEO Jim Farley has

frequently tested Chinese EVs and recently praised Xiaomi's SU7

electric sedan.

Volkswagen has expanded plans to develop China-dedicated

models of all fuel types based on platforms co-developed with

Xpeng ( XPEV ), using the latter's layout designs of electronics and

software.

Analysts say legacy automakers typically struggle to develop

agile EV systems that can be rapidly updated, due to complicated

organisational structures.

That is why Volkswagen wants to see if Xpeng's ( XPEV ) EV

technologies can complement or replace Volkswagen's own, said

Yale Zhang, managing director at Shanghai-based consultancy

AutoForesight. If it works in China, Volkswagen could apply the

strategy globally, Zhang added.

A Volkswagen China spokesperson told Reuters its

collaboration with Xpeng ( XPEV ) was focused on China for now.

Xpeng's ( XPEV ) He Xiaopeng has said the two automakers want to

expand their partnership beyond China. That would boost Xpeng's ( XPEV )

revenue without building plants overseas, said Autodatas' Wang.

Oliver Wyman analyst Marco Santino said traditional

automakers could use "firepower" of fierce Chinese EV

competition to jump ahead of the development curve.

"You get a much more quality-proof product in the market in

a shorter timeframe," Santino said.

MORE CHOICE?

Inspired by Tesla, China's EV makers have developed modular

platforms that cut costs and accelerate development and lower

barriers of entry. "They are quick learners from Tesla," said

Forest Tu, a former executive at Chinese battery giant CATL

who founded consulting firm Mapleview Technology.

That advantage is now big enough to sustain "licensing and

royalty service" as Chinese EV makers expand overseas, Tu said.

CATL adopted that approach with Ford, licensing its

technology for a battery plant.

Exporting Chinese technology could help less-industrialized

countries build their own "national EV brands," Tu said.

Abu Dhabi-based CYVN Holdings, a strategic investor in Nio

, has developed its own premium EV model using the

Chinese EV maker's chassis and software.

CYVN bought British sports car maker McLaren in April and

now plans to sell its EV using the McLaren brand, according to

two sources familiar with the matter. But future models will

incorporate far more McLaren "DNA" and less Chinese technology,

one source said.

Nio declined to comment. CYVN did not respond to a request

for comment.

CATL's new EV chassis, meanwhile, will allow consumers to

"decide what an EV looks like, rather than having giant

automakers decide what to sell," its executive president Hu

Guoliang said.

CATL said it would ramp up chassis production in the next three

years after signing with several domestic automakers. Its

Bedrock Chassis debuted in Europe this week at the IAA Mobility

show in Munich.

Whether the mutual benefits of China's EV technology last

over the longer-term, however, remains a key question.

Former Aston Martin CEO Andy Palmer said while there were

savings in R&D, automakers should avoid over-reliance on

third-party technology. "In the long-term you're screwed because

you're just a retailer," said Palmer.

Oliver Wyman's Santino said the big risk for traditional

automakers is that using someone else's technology means "your

capability to differentiate your brand is really limited." By

blending in their own technology, automakers can "limit the

risk," Santino added.