Summary of Key Points
After a initial round of new energy transformation that saw mixed results, joint-venture brands (such as Volkswagen, Toyota, and Nissan) have launched a second round of counterattacks. They are adopting aggressive strategies such as dramatic price cuts, localized technology development, addressing shortcomings in intelligence, and reformed decision-making mechanisms. This round of transformation is no longer about whether to transform or not, but about whether they can survive in the new market landscape. Although the market window is narrowing, the return of rational consumer behavior, the approaching vehicle replacement cycle, and the remaining market space of around 6 million units give these brands a chance.
1. Pricing Strategy: Joint-Venture Cars Lower Their Barriers and Compete Directly with Domestic Brands
In the past, the pricing of joint-venture new energy vehicles was set high, considering costs and brand premiums, with competition mainly limited to other joint-venture models of the same class to ensure profitability. However, this has changed significantly. They are now directly competing with domestic brands, offering prices that were previously unthinkable for fuel-powered vehicles. For example, the FAW-Volkswagen ID.AURA T6 (an A+ class electric SUV) is pre-priced at 130,000 yuan, and the SAIC-Volkswagen ID.ERA 5S (a plug-in hybrid sedan) starts at 89,900 yuan, which are on par with or even lower than the prices of similar domestic models. In industry terms, this is a “table-turning” pricing strategy—no longer holding onto the pretense of being joint-venture brands, but facing competition head-on.
Nissan executives have also acknowledged a shift in approach, from focusing on competing products and setting prices based on them to targeting the needs of Chinese consumers.
2. Why Was the First Round of Transformation a Failure?
Around 2021, joint-venture brands first tried their hand at new energy vehicles (such as the Volkswagen ID.4/6, Toyota bZ series, and Honda e:N series), but most of them failed to achieve satisfactory sales. For instance, the Volkswagen ID.3’s sales briefly exceeded 10,000 units per month after a price cut, but then declined rapidly, and the Toyota bZ and Honda e:N almost disappeared from the market. There were three main reasons for this:
1. Lack of Intelligence: Joint-venture vehicles suffered from poor user experiences and slow updates to assisted driving systems. Wang Shengli pointed out that this is a reality that must be addressed.
2. Misjudgment of the Chinese Market: The companies did not anticipate the rapid adoption of new energy vehicles, leading to delayed product planning and launch timing.
3. Overemphasis on Foreign Input: The vehicles were adapted from global versions for the Chinese market, resulting in long development cycles and prices that were out of reach for Chinese consumers.
3. Second Round of Transformation: Focusing on Intelligence and Localized Development
To overcome the challenges of the first round, joint-venture brands are taking systematic steps to improve:
1. Changing the Underlying Architecture: Volkswagen is using a new CEA architecture developed by its local team to accelerate software updates. Nissan has developed its own “Evolutionary Architecture” with global development authority, and Toyota is using China as a hub for research and development, leveraging Chinese technology to benefit its global products.
2. Collaborating with Local Supply Chains for Intelligence: Volkswagen is working with domestic suppliers to improve the intelligence of its new vehicles, aiming to match the standards of domestic brands.
3. Faster Decision-Making: FAW-Volkswagen has implemented a “Product CEO” system, where Chinese and German teams make joint decisions. The Hefei R&D center, with 3,000 engineers, now has the authority to initiate projects independently, and decision-making meetings have increased from once or twice a month to twice a week, significantly speeding up the process.
Wang Shengli stated, “The new ID.6 incorporates Chinese technology and supply chains, blurring the lines between joint-venture and domestic brands.”
4. It’s Not a Choice, but a Matter of Survival: The Joint-Venture Model Is Being Forced to Transform
In the past, the model was “foreigners providing technology, and locals manufacturing the vehicles” (Version 1.0). Now, the situation has reversed. Without advanced technologies adapted to the Chinese new energy market, joint-venture companies must rely on their own teams. For example, SAIC-GM’s annual production capacity was once 2 million units but has been reduced to 400,000 units. In the first half of 2026, eight of the top ten joint-venture automakers saw sales declines, with some having cumulative sales of less than 100,000 units. Professor Zhu Xichan pointed out that joint-venture partners have become a burden for Chinese companies; without transformation, they will not be able to survive.
5. Is There Still a Chance?
Despite the pressure, joint-venture brands still have opportunities:
1. Return of Rational Consumption: Joint-venture brands emphasize quality and reliability, which may appeal to consumers who value long-term performance.
2. Approaching Vehicle Replacement Cycle: The first batch of new energy vehicle buyers (from around 2021) will start replacing their vehicles, and they will place more emphasis on long-term usage experiences, where joint-venture brands may have an advantage due to their engineering expertise.
3. Remaining Market Space: Gaisi Automobile predicts that China’s passenger vehicle market will exceed 31 million units by 2030. Even if domestic brands account for 80% of the market, joint-venture brands will still have a 20% share (around 6 million units). Although this is smaller than the peak of the fuel-powered vehicle era, it is sufficient for mainstream joint-venture brands to survive and grow.
Wang Shengli concluded, “The new energy landscape is still evolving. The lack of successful joint-venture products is due to the initial phase of intensive market entry. Once the intelligence and user experiences catch up with domestic brands, and the vehicle replacement cycle arrives, the market will remain open.”
In summary, the second round of new energy transformation for joint-venture brands is a battle for survival that involves lowering barriers, addressing shortcomings, and seizing time. Although the path is difficult, there is still a chance for them to turn the situation around.