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Trade war and safety concerns take centre stage at Shanghai auto show

Trade war and safety concerns take centre stage at Shanghai auto show

Time of India24-04-2025

China's annual auto shows have become the world's premier showcase for the rise of ever-cheaper, high-tech
electric vehicles
from upstart domestic brands in the world's biggest car market.
But the
Shanghai auto show
opened on Wednesday amid industry-wide uncertainty over how the
U.S.-China trade war
could sap demand and upend supply chains as about 70 automakers launched more than 100 new models into a crowded market with more losers than winners.
Automakers also wrestled with a Chinese government crackdown, announced last week, on the marketing of smart-driving systems that many industry executives view as the next technological battleground here.
"In China, electrification was the first phase" of the domestic industry's development, said Bo Yu, a China-market expert from research firm Jato Dynamics. "Now it's all about what we call 'smartification.'"
Automakers were forced to pivot to a safety-first message at the show after regulators banned terms including "smart driving" and "autonomous driving." The rules followed a fatal accident of a
Xiaomi
SU7 EV in March involving the car's driver-assistance system.
U.S. President Donald Trump's move to impose a 145% tariff on Chinese imports and Beijing's retaliatory tariffs have pushed global growth forecasts lower as automakers and suppliers to confront new risks.
Chinese automakers
also face tariffs in the European Union.
As the Shanghai show started Wednesday, a coalition of U.S. auto-industry groups sent a letter to Trump urging a repeal of 25% tariffs on imported auto parts, warning of rising vehicle prices and falling sales.
Chinese vehicle demand has held up so far this year despite the trade war. Auto sales through March were up 12.5%, with the gains led by China's top two automakers,
BYD
and Geely.
But there are signs of trouble. Chinese cars were already essentially banned from the U.S. market before Trump's latest flurry of tariffs. But China's domestic industry could still suffer from weaker demand if the nation's economy wobbles or pressure from Washington forces other U.S. trade partners to restrict trade with China.
'SMART DRIVING' CRACKDOWN
Chinese automakers, led by BYD, had been heavily marketing their assisted-driving technology before the show and offering it at lower cost - or free - to gain an edge in the competitive market.
Xpeng, which touts its AI-driven assisted-driving technology, said at the Shanghai show that it would launch a "training camp" for drivers on using its systems safely.
"We will emphasise the capability boundaries of the driving-assistance functions to ensure safety," Xpeng CEO He Xiaopeng told reporters.
The Xpeng founder said at a Hong Kong press conference last week that it might take a decade or more for the industry to develop fully self-driving systems, which face steep regulatory and legal hurdles along with technological challenges.
BYD recently upended the industry by offering its "God's Eye" assisted-driving technology across its model lineup as standard equipment. But it skipped any mention of the technology in Shanghai press conferences where it unveiled models including the low-cost Seal 06 and Sealion 06, along with luxury models.
Lei Jun - the celebrity CEO of Xiaomi who stole the limelight at last year's Beijing show - was conspicously absent as this year's Shanghai show opened. The company only showcased its existing SU7 and SU7 Ultra vehicles. Many industry observers had expected Xiaomi to unveil its highly anticipated YU7 electric SUV, a challenger to Tesla's best-selling Model Y.
A Xiaomi spokesperson said on Wednesday that Lei would not attend the Shanghai show, citing a scheduling clash.
'CHINA SPEED'
China's hyper-competitive 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.
"The alarming thing at this show is the enormous amount of technology and content that's being given to customers at such a low price," said Matt Noone, a design executive at General Motors' Buick brand. "Chinese carmakers are now offering intelligent driving on entry-level vehicles. How do you make money on that?! Are you making money on that?"
Noone said Buick models had to "earn their way" into the lineup by being profitable, which has driven the brand to cut the number of models it offers in half to about 10.
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.
General Motors' Cadillac showed off an all-electric lineup of models - the Lyriq, Optiq, Vistiq and Escalade IQ.
"This shows that GM sees Cadillac as its best bet to get back into China in a big way," said Tu Le, founder of consultancy Sino Auto Insights, who attended the Cadillac event.
But the brand would likely have to sell the models in China at lower prices than in the United States, he said.
BMW and Honda announced they would integrate artificial-intelligence technologies from Chinese startup DeepSeek into their models.
Foreign brands face a stiff challenge in catching up to their Chinese competitors, said Andrew Fellows, global head of automotive and mobility at technology consultancy Star.
"The Western carmakers slept their way through the pandemic while the Chinese rode the EV revolution," he said. "They're going to find it hard to dislodge the local carmakers."

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