Shanghai Auto Show: Self-Driving Safety Concerns, Trade War Rule Stage

NDTV

23-04-2025

SHANGHAI: China's annual major auto shows have become a showcase for the rise of ever-cheaper, better-performing electric vehicles and more confident local brands in the world's biggest market for cars. But the Shanghai auto show opened on Wednesday amid deep industry-wide uncertainty over how the U.S.-China trade war could dampen demand and scramble supply chains as 100 more models launch into an already crowded market with more losers than winners.
In a further complication, Chinese regulators signalled more and tougher scrutiny for smart-driving features that many automakers had seen as the next big thing in setting apart their cars from competitors just a week ago.
U.S. President Donald Trump's move to impose a 145% tariff on Chinese imports and Beijing's counter-tariffs and trade restrictions have pushed global growth forecasts lower and forced automakers and their suppliers to confront new risks.
As the Shanghai show began on Wednesday, a coalition of U.S. auto industry groups sent a combined letter to Trump urging him to roll back 25% tariffs on all imported auto parts, warning the duties would cut vehicle sales and raise prices.
The first blitz of presentations by automakers in Shanghai focused on safety and plans for a rapidly expanding portfolio of EVs from brands like Volkswagen and Nio without discussion of the economic uncertainty.
Car demand in China has held up so far this year despite the trade war. Industry-wide auto sales through March were up 12.5%, led by gains for BYD and Geely, China's two top automakers.
But there are also signs of trouble. China is now the world's largest car exporter by volume. While the U.S. market is essentially closed due to tariffs, analysts expect the Trump administration's trade policies to put pressure on Chinese automakers. That could come through weaker demand in China if its economy wobbles or pressure from Washington that could force other U.S. trade partners to align their tariffs.
CHINA CRACKS DOWN ON 'SMART DRIVING'
Chinese automakers, which had been preparing to heavily market their driver-assistance features to set their cars apart from competitors at the show, were forced at last minute to switch to a "safety first" message.
Regulators last week cracked down on the use of marketing terms like "smart driving" and "autonomous driving" after a fatal accident involving Xiaomi's best-selling SU7 EV in March that triggered concerns over how drivers were using systems not designed to be fully self-driving.
Chinese automakers, led by BYD, had previously been pushing advanced and autonomous driving systems, including on cheaper models, in a challenge to Tesla.
Xpeng, a brand built on the appeal of its in-house technology, including an artificial intelligence-powered virtual assistant, said it would launch a "training camp" for drivers on how to use its systems safely.
'We will emphasise the capability boundaries of the driving assistance functions to ensure safety,' Xpeng CEO He Xiaopeng told reporters on Wednesday.
Geely said it would complete a global security testing center, which it described as the world's largest standalone safety laboratory, in the second half of this year.
Volkswagen stressed its rigorous German craftsmanship and strict testing standards.
Lei Jun, the celebrity CEO of Xiaomi who stole the limelight with a crowd of cameras following his every move at last year's Beijing show, was absent from Shanghai as the show opened.
CHINA SPEED
China's hyper-competitive local market remains a minefield for foreign brands. Sales for Honda and Nissan, for example, were down 34% and 28% respectively in the first quarter from a year earlier.
Volkswagen, once China's top-selling passenger car brand, saw sales drop 6% in the first quarter. Under an electronic banner with the motto 'CHINA SPEED,' the German automaker on Wednesday unveiled the first of five new models, including for its premium Audi brand.
More than 70 Chinese and international auto brands will show off more than 100 new or refreshed models this week.
Less than 10% of the more than 160 auto brands competing in China have a market share higher than 2%, according to data from Jato Dynamics. Most still lose money. Among the winners: BYD, Chery and Geely are profitable, along with EV-focused Leapmotor and Li Auto.
Tesla, the only foreign automaker with a top-selling EV in China, said on Tuesday that it would have to reassess its growth forecast in three months because of the difficulty in predicting 'the impacts of shifting global trade policy on the automotive and energy supply chains."
The trade war has already hit Tesla. Its China sales were down 22% through March from a year earlier. The company has suspended orders for the Model S and Model X because of China's counter-tariffs and paused some imports of China-sourced components.
Tesla CEO Elon Musk said on Tuesday while announcing a 71% plunge in first-quarter net profit that the EV maker's already-delayed production plans for its Optimus humanoid robot had been slowed by China's restrictions on the export of the rare earth magnets needed for the motor powering the robot's arms.
Musk had earlier predicted the robot would be working in Tesla factories this year.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)