A consensus is growing that the Chinese automotive industry has stolen a march on the rest of the world in the design and production of electric vehicles (EVs).
Kevin Williams, a US-based observer of the EV market and a staff writer for specialist publication Inside EVs, returned from the 2024 Beijing Auto Show with a stark prediction: “I went to China and drove a dozen electric cars. Western automakers are cooked”, ran his headline.
He is not alone. Commentators both inside and outside China agree that the country looks set to dominate the global car manufacturing industry. Their observation is that the EV products now emerging from Chinese manufacturers are considerably better than the models on sale from the giant car companies of the US, Europe, Japan or Korea.
And the respect for Chinese car manufacturing is not just about the battery and driving range. Yes, the huge scale, technical capability and competitive cost of China’s lithium battery industry are important to EV car makers. But the superiority of the Chinese vehicles extends to the user interface (UI), body designs, and integration with the consumer’s other technology products, such as smartphones and smart watches.
As Williams said in his report, “No matter the price point, [the new Chinese EVs] all felt incredibly convincing. They’re high-tech, well-executed machines in ways I hadn’t experienced from European or American manufacturers.”
It is as though China’s automotive industry has used the move from a fossil fuel-powered drivetrain to an electric drivetrain to leapfrog traditional car makers.
Smart consumer tech
This analysis makes a lot of sense. Traditional car manufacturers have been focused on the internal combustion engine (ICE). For perhaps the past 30 years, consumer expectations and government regulation have been pushing car manufacturers to make petrol- and diesel-engine cars ever more fuel-efficient, while improving the driving experience by making the drivetrain faster, smoother and easier to operate.
Technically, this has been incredibly difficult to achieve. So traditional auto makers have been on a treadmill of arduous, expensive, time-consuming engineering effort to achieve marginal gains in ICE output.
Then along came the EV, and everything changed.
The technical problem of the electric motor was to all intents and purposes solved many years ago. In fact, the entire electric drivetrain is massively simpler than an ICE-based car’s is. So new EV makers in China could focus their engineering resources elsewhere – for instance, on optimising the in-cabin experience.
This helps to explain why Chinese EV makers have made the advances that Williams was so struck by, in particular, giving the car the feel of a contemporary consumer electronics device, through the provision of large, responsive touchscreens, and seamless integration with data and apps shared across the consumer’s digital life.
It’s notable that one of the most well-known EV manufacturers in China is Xiaomi, a smartphone manufacturer which was not even in the mobility business before the 2020s.
Semiconductor supply chain
So how does this affect the value that the semiconductor industry can bring to European and American car companies?
The semiconductor companies with dominant positions in the automotive industry today have built their products to fit the rhythms and requirements of the ICE-based world: developing a new model was a slow and laborious process that was pursued in a spirit of risk aversion.
The new Chinese EV manufacturers which threaten the incumbent automotive companies are the opposite - they develop new models fast, embrace innovation, and take calculated design risks in the knowledge that mistakes can be quickly rectified.
To this end, they have deliberately adopted a design philosophy which emphasises the need for adaptability and programmability: this philosophy is expressed in the common use of programmable components, either hardware (such as FPGAs) or software (conventional code and, increasingly, AI systems).
It is this combination of speed and flexibility which has enabled Chinese EV makers to evolve the user interface, and the car’s interior more generally, through several generations while western car companies’ UI designs have barely changed. Crucial to this evolution has been the use of programmable technology, which allows for continuous development and frequent upgrades of existing designs without the need to completely change a car’s hardware platform.
An industry response
So, we need to ask how should the non-Chinese automotive industry respond?
Car manufacturers in the US, Europe, Japan and Korea might be protected for a short time by government-imposed restrictions on imports of Chinese vehicles. But the car industry is global, and the supply chain is heavily skewed towards China: according to industry analyst Michael Dunne, China already has enough capacity to manufacture half of the 80 million new vehicles produced each year, and that volume is growing. Protection from competition will not save the automotive industry outside China.
It will be much more productive to learn fast from the Chinese EV industry. Car companies in Europe and the US already know how to do this: in the 1980s, Japan Inc threatened to topple the previously dominant US car makers with its superior production operations and higher-quality designs.
But the US car industry was not destroyed, instead, it accepted that the Japanese car makers were ahead of them, learned from them, and adopted the best Japanese practices. Now it’s time to acknowledge the ways in which the Chinese car industry is ahead, and to learn from it.
Gowin Semiconductor has a privileged view of the challenge that western car companies face. Our global engineering headquarters are in Guangzhou, China, but our senior leadership team operates from San Jose at the heart of Silicon Valley, and the company’s international sales operation is run from a base in the UK. We straddle east and west.
And we are an FPGA company: our products are in huge demand at China-based automotive manufacturers, which prize the flexibility and programmability that an FPGA offers.
This means that we see from the inside how China’s EV manufacturers innovate, and how they have adopted new practices – such as the widespread use of programmable devices – to gain a competitive edge.
Chinese EVs already make up 60 percent of worldwide sales, according to the International Energy Agency, and the likes of Tesla and BYD have been fighting for market share over the last couple of years.
Figures compiled by TrendForce and published in February 2024, showed that Chinese manufacturers already hold three of the top five spots for global market share – with BYD at 17 percent, GAC Aion at 5.2 percent and SAIC-GM-Wuling at 4.9 percent, while Tesla is clinging on to the top spot with a market share of 19.9 percent while Volkswagen is in fifth spot with a market share of 4.6 percent.
Chinese manufacturers were responsible for just 0.1 percent of global EV sales in 2012 – just 12 years ago and were dismissed as viable competitors by the likes of Tesla’s Elon Musk - so if Western car companies want to better understand and learn from the technological and commercial innovations of China’s EV industry, it might be worth their while talking to companies like Gowin, the biggest supplier of FPGAs to China’s EV manufacturers, to better understand what’s driven their success over the past 10 years.
Author details: Mike Furnival, Vice President of International Sales, Gowin Semiconductor
