Chinese automakers’ need for speed comes with a price

IN RECENT years, Chinese carmakers, particularly those focused on electric vehicles (EVs), have hit the accelerator on new model launches with an eye on grabbing a larger share of China’s ferociously competitive market.

In 2025, the number of new vehicle models released in the Chinese market hit a record of 167, up from 157 in 2024, according to a report released in December by CMB International. This year, the number is expected to reach 173.

The fast-paced launch of new models is largely driven by the industry’s rapid shift towards electrification, as the improved compatibility of key EV components such as batteries across different brands and the widespread adoption of digital and artificial intelligence technologies have streamlined vehicle design and testing.

Many domestic EV-makers have managed to shorten their research and development (R&D) cycles for new cars to under two years, a production line manager at a carmaker told Caixin. That’s a big change from the era of conventional vehicle domination, when automakers typically spent at least four years developing a new model.

In addition, the growing demand for autonomous driving has played a part in the frequency of new model launches as carmakers have to keep up with how fast smart car technologies iterate. For example, Nvidia and Qualcomm typically upgrade their chips used in driver assistance and digital cockpit systems every two years.

The endeavour has helped Chinese carmakers gain a stronger foothold in China’s auto market, where new-energy vehicles (NEVs) are gaining ground. Homegrown brands took a record 69.5 per cent share of domestic passenger car sales in 2025.

However, this shortened development cycle has come with drawbacks. For one, it risks alienating customers and eroding brand trust. Financially, the fast pace makes it difficult for already-struggling EV-makers to recover their R&D costs, contributing to an industrywide profit margin decline despite record sales. And finally, the accelerated timeline can compromise a vehicle’s quality and safety, leading to more reliability issues compared to conventional cars.

The situation has forced automakers and regulators to confront a critical dilemma: how can they maintain rapid innovation without sacrificing financial health, customer loyalty, or fundamental product safety?

Speed first

How long a carmaker can stay competitive often hinges on how fast it launches new models.

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With this in mind, many Chinese automakers have tried to streamline R&D. In January, for example, Zhejiang Geely Holding Group announced a goal to reduce its R&D cycle for new cars by 30 per cent over the next five years.

The pace of new vehicle development is closely associated with the use of new, unique, different and difficult (NUDD) components, an endeavour that serves as a gauge for a new model’s originality. In the era of conventional vehicles, internal combustion engines were the most important NUDD component, and carmakers used them as a key selling point. By contrast, the core components of smart EVs are produced on a standardised basis, reducing the importance of traditional NUDD parts.

Once the electronic architecture of an intelligent car is developed, it can be used across different models, helping an automaker save time on the development of future vehicles, according to a source close to Huawei Technologies, which sells NEVs it develops with partners in the industry.

Other time-saving approaches include creating temporary dies to assemble prototype vehicles to verify component quality before final dies are developed, the production line manager said.

In January, Porsche China CEO Alexander Pollich said that the luxury carmaker’s lengthy R&D cycle had left it slow to respond to changing consumer demand, contributing to its sales slump in China, which has gone on for four consecutive years since 2022. Pollich said that some German carmakers have started learning innovative new vehicle development methods from their Chinese competitors.

Porsche’s parent Volkswagen has led the way in this regard, giving its China team a mission to develop an EV platform for entry-level models. Similarly, Toyota Motor has launched three pure electric models developed by its China team for the domestic market, which reduced the R&D cycle to as short as two years.

Pacing problems

While a shorter R&D cycle can help keep carmakers competitive, it can backfire when the owners of older models grow unhappy as they watch newer buyers get a significantly upgraded version of the same car at the same price.

In August 2024, Geely’s EV subsidiary, Zeekr Intelligent Technology Holding, faced a backlash when customers complained about how the company upgraded its 001 pure electric sedan twice in less than a year without increasing its price. They said the practice was eroding their trust in the brand.

The public relations crisis tarnished Zeekr’s image, costing the 001 its position as one of the company’s best-selling models. In 2025, Zeekr’s total sales edged up just 0.9 per cent as demand for the 001 weakened.

The fast-paced launch of new models, coupled with the potential risks linked with the use of new technologies, has made it hard for carmakers to recover their R&D costs over such a short period. That’s a big problem for EV-makers, many of which are struggling to turn a profit.

Although China’s auto sales rose nearly 10 per cent last year to a record 34.4 million vehicles, the industry’s profit margin fell 0.2 percentage point to 4.1 per cent, the lowest in more than a decade, according to industry and government data.

The industrywide profit margin shows no signs of rebounding as the costs of sourcing essential EV components such as batteries and memory chips continue to grow, said Gong Min, head of China automotive research at UBS, adding that an EV supply chain shared by many automakers could lead to product homogeneity, making discounting the only way for carmakers to boost sales.

Worse still, short R&D cycles mean less time to ensure aspects of a vehicle’s quality. In China, the number of reliability issues was significantly higher in NEVs than in conventional vehicles, JD Power said in a report last year. The industry consultancy blamed the difference on NEV-makers’ moves to shorten their R&D cycles to ease cost concerns, as well as a lack of durability testing.

Seeking solutions

Chinese regulators have taken notice of the drawbacks of short R&D cycles. Last month, the Ministry of Industry and Information Technology issued a revised rule that now requires NEVs to go through at least 15,000 kilometres of reliability testing before they can go to market. For conventional cars, the requirement is 30,000 kilometres.

The new rule, set to take effect on Jan 1, 2027, also encourages the development of new technologies and materials as long as they do not compromise vehicle safety and reliability. Basically, vehicles will go through eight key steps before entering mass production, with major component designs and vehicle safety testing taking up a large portion of the R&D process.

Carmakers seem to be aware of the issues. After the 2024 crisis, Geely started informing consumers of Zeekr vehicle upgrades in advance and offered sales promotions for older models, said Lin Jie, a senior vice president at the automaker. The practice helped win back some consumers and stabilised Zeekr’s sales.

In the future, automakers may take a more varied approach to upgrading their models, said the source close to Huawei. They will likely choose to limit the frequent updating to their high-end models because their higher price tags can offset some of the costs of adopting new technologies. CAIXIN GLOBAL