Chinese OEMs lead in providing a superior customer experience to local consumers.As they strive for improvement, OEMs will gain more by focusing on vehicle- and system-level collaboration, rather than the traditional, siloed approach in which they try to optimize individual components. By contrast, our benchmark shows that OEMs have the potential to reduce costs in e-powertrains by double digits relatively quickly. With combustion engine vehicles, such improvements have always been important, but they tend to occur incrementally over long periods. OEMs still have the opportunity to increase efficiency significantly across vehicle systems, especially in the e-powertrain.In summary, our work revealed the following major areas of insight: To gain additional insights that reflect the growing competition, we expanded our original benchmark analysis to include two additional BEV models that were specifically developed by international OEMs for the Chinese market (see sidebar, “About our benchmark”). In a previous article, we benchmarked ten popular Chinese BEVs in a detailed technical analysis that also provided cost estimates for individual components. International OEMs, which are accustomed to serving other markets, may find that some of their most popular features carry less weight in China. Chinese OEMs also have a head start because they understand local customer preferences and have designed their vehicles to suit them.

How will these “newcomers” succeed? While international OEMs have many advantages and a long record of producing quality cars, they may find obstacles ahead because Chinese automakers are part of a well-established local BEV ecosystem, characterized by battery and electronics expertise and a strong focus on a fast time-to-market. This article was a collaborative effort by Clemens Dabelstein, Philip Schäfer, Dennis Schwedhelm, Jingbo Wu, and Ting Wu, representing views from the McKinsey Center for Future Mobility.

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