Summary of Key Points
At the Chengdu Auto Show, joint-venture automakers such as SAIC Volkswagen and BMW no longer put on the pretense of having a “brand premium.” They are engaging in a “do-or-die” battle in the new energy market by drastically reducing prices (for example, the ID.ERA 5S is now available starting from 89,900 yuan, and the BMW iX3 is even cheaper than its fuel-powered version) and localizing their intelligent driving systems (by collaborating with Chinese technology companies to implement urban NOA functions). This is driven by the rapid shrinkage of the fuel vehicle market (with new energy penetration exceeding 65%) and the significant lag of joint-venture brands in the new energy sector (with a penetration rate of only 13.7%). Although these companies are making a concerted effort, they also face challenges such as product homogenization and the strong dominance of market leaders, indicating that the second half of the competition in China’s new energy market has entered a particularly intense phase.
1. The Price War Hits Domestic and New Entrants Directly
The price cuts by joint-venture automakers are no small matter; they are making a bold move:
- SAIC Volkswagen ID.ERA 5S: The official guide price is 119,900 yuan, but after discounts, it’s available for 89,900 yuan, which is cheaper than similar domestic hybrid vehicles (such as the BYD Qin PLUS DM-i, which starts at around 99,800 yuan). Volkswagen internally even says that this car, with its advanced features and intelligence, could potentially compete with their own fuel-powered models, so they are willing to cut prices to achieve high sales.
- BMW New Generation iX3: The pre-sale price is 269,900 yuan, which is 40,000 yuan cheaper than the current fuel-powered X3 (318,000 yuan), and it directly competes with the Tesla Model Y (263,900 yuan) and the Xiaomi Yu7. This is the first time a luxury brand has priced a mid-size electric SUV in the 250,000 to 300,000 yuan range, breaking the unwritten rule that luxury cars must cost over 300,000 yuan.
Why such a dramatic change? The era when joint-venture brands could charge high prices simply because of their reputation is over. Chinese consumers now value affordability and practical intelligence, so joint-venture brands must play by the rules of the Chinese market.
2. Intelligent Driving Systems Are No Longer Out of Place: Collaborating with Local Technology Companies to Fill Gaps
Joint-venture cars’ intelligent driving systems were often criticized for being “unrelevant” to Chinese conditions—e.g., using European-based systems for infotainment and navigation that didn’t work well in China’s complex roadways. Now, they are letting go of their obsession with “global standards” and working closely with Chinese technology companies:
- SAIC Volkswagen: They are collaborating with Horizon (a leading Chinese AI chip company) and Momenta (an autonomous driving company) to bring features like “urban NOA” (automatic navigation, following traffic, and lane changing) to the ID.ERA 5S, which was previously only available in more expensive models.
- BMW iX3: They are developing an intelligent driving system with Momenta’s reinforcement learning technology, covering both urban and highway scenarios, solving the issue of the system only working on highways but not in cities.
In short, joint-venture cars are finally adapting to Chinese road conditions using Chinese technology.
3. Fuel Vehicles Are Losing Ground: Joint-Ventures Are Forced to Compete in the New Energy Market
The transformation of joint-venture brands is not voluntary; it’s a result of market forces:
- Rapid Growth of New Energy: In July 2026, 951,000 new energy vehicles were sold, accounting for 65.1% of total sales, with some months seeing over 70%—leaving only 30% of the market for fuel vehicles.
- Severe Lag of Joint-Venture Brands: Joint-venture brands have a new energy penetration rate of only 13.7%, compared to 83.8% for domestic brands, and their overall market share has dropped to 20.3%, losing their former dominance.
- Even Luxury Brands Are Struggling: The profits of BBA (Mercedes-Benz, BMW, Audi) declined in the first half of 2026, and their sales in China have also decreased, leading to several price cuts.
Fu Qiang from SAIC Volkswagen said, “For fuel vehicles, we are defending our territory; for new energy, we need to take an aggressive approach and seize the market.”
4. Many Challenges Ahead: Products May Be Short-Lived, and the Dominance of Market Leaders Is Even More Intense
Although joint-venture brands are making efforts, success is uncertain:
- The New Product Death Trap: The industry says it’s difficult for new products to survive more than 3 to 6 months due to fierce competition. As soon as a hit product is released, competitors quickly analyze its technology and copy its features, leading to homogenization. Over the first half of the year, more than 100 new models were launched, making it impossible for consumers to keep track of them all.
- Intense Dominance of Market Leaders: In the new energy market, only the top two brands may survive, with the third place being very risky. For example, BYD and Tesla currently dominate the market, making it extremely difficult for joint-venture brands to break in.
The solution? They need to iterate their products faster and more accurately meet Chinese consumer needs—e.g., since Chinese consumers value large spaces and intelligent cockpits, joint-venture brands must make targeted adjustments and stop using generic global models.
5. The Second Half of the Race Has Begun: Intense Competition with the Entry of Joint-Ventures
Previously, the new energy market was dominated by domestic brands and new entrants. Now, with joint-venture brands entering with lower prices and localized technologies, the competition has become more intense. The Chengdu Auto Show is just a sign of this change:
- Joint-venture brands are no longer the slow followers; they are using drastic price cuts (like Volkswagen’s 89,900 yuan and BMW’s 269,900 yuan) and practical intelligent systems to compete directly with domestic and new entrants.
- The competition will become even more brutal, with fiercer price wars and more competitive intelligent features. Consumers will get more affordable cars, but automakers will face greater challenges.
In summary, the “do-or-die” strategy of joint-venture brands has transformed China’s new energy market from a dominion of domestic brands to a multi-faceted battle. The second half of the race is truly a clash of titans.