(Bloomberg) -- China’s carmakers risk falling behind global rivals because the country trails in the production of advanced components like chips and software that are crucial for modern vehicles, a prominent industry adviser warned.
The government should form a comprehensive component strategy and build a platform that connects automakers with suppliers, helping local developers of advanced parts, Zhang Yongwei, vice president of China EV 100, a high-profile electric-vehicle industry think tank, said Thursday at a forum in Nanjing, China.
China is pushing for greater self-reliance amid tensions with trade partners including the U.S. As the auto industry moves toward electrified and self-driving vehicles in a once-in-a-century shift, suppliers of software and semiconductors are gaining in importance.
“The supply-chain problem has to be solved,” Zhang said at the industry gathering. An automobile powerhouse must have a strong supply chain of its own, he said.
China has been the world’s biggest vehicle market and producer for a decade, claiming about a third of the global total. But in semiconductors, China has only one company in the top 20, Zhang said. Less than 5% of automotive chips are made in the country and for some key components, carmakers rely 90% on imports, he said.
Meanwhile, semiconductor-based components are set to account for more than 50% of a car’s manufacturing cost by 2030, up from about 35% now, according to a report by China EV 100 and Roland Berger.
During an inspection tour to carmaker China FAW Group Corp. in July, President Xi Jinping stressed the need to reinforce research and development of core technologies and key parts to promote China’s auto industry and make domestic brands stronger.
©2020 Bloomberg L.P.
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