The 15th Five-Year Plan period marks the decisive stage for China to achieve the Long-Range Objectives for 2035 and build itself into an automotive powerhouse. From April 11 to 12, the High-Level Forum on Intelligent Electric Vehicle Development (2026) was held under the theme of Intelligence, Green Development, Integration and Globalization. It focused in depth on the global industrial landscape, cutting-edge technologies such as AI+automotive and chip computing power, aiming to drive the steady and sustained high-quality development of China’s new energy vehicles (NEVs) at this critical window.
During the forum, Zhang Yun, Global CEO of Ries Strategy, sat down with the media to discuss recent hot topics in the industry.
Zhang Yun, Global CEO of Ries Strategy
Regarding the industry’s current dilemma of growing volume but not profits, Zhang Yun pointed out that this is essentially because everyone is selling the same dumplings at the same market, leaving only those who sell dumpling wrappers (suppliers) profitable. In the past, China’s automotive industry competed on energy forms and supply chain capabilities, but the core of future high-quality development lies in strategic innovation.
Just as Subaru achieved the world’s highest profit margin by abandoning two-wheel drive and focusing exclusively on four-wheel drive, Chinese brands must shift from minor tweaks to genuine category innovation.“Either you have price, or you have differentiation.”Without strategic differentiation, brands can only harm each other in inefficient internal competition.
Future competition will no longer be about improving energy forms, but about leadership in super technologies. AI vehicles and autonomous driving are not just new species—they will reshape human mobility space.
Zhang Yun noted that the arrival of the intelligent driving era will accelerate the phase-out of fuel vehicles, even hybrids and ultra-hybrids.The response speed of fuel-based architectures is far inferior to electric architectures. Once autonomous driving becomes a necessity, hybrids will be reduced to the new fuel vehicles. At this technological inflection point, only companies like Tesla and XPeng, which invest hundreds of millions monthly and possess exclusive leading technologies, will secure a ticket to the autonomous driving future.
As for traditional joint-venture brands, Zhang Yun stated frankly that BBA’s dominant position in the fuel era has become a cognitive shackle in the NEV era. Consumers can hardly associate traditional legacy brands with cutting-edge intelligent technologies—a rule determined by brand perception. Therefore, for traditional automakers to build competitiveness in the NEV market, launching new brands is the only path.
China is at a historic turning point from follower to leader. Chinese brands must leverage the scale advantage of AI as an open-source system. They should not only sell products but also occupy global consumers’ minds, achieving a one-generation-ahead brand premium in European and American markets.
Edited Transcript of the Dialogue
Q1: As a global strategy consulting firm, how does Ries view the competitive advantages of Chinese NEV brands in the global market? The industry is now shifting from scale expansion to high-quality development. What advice do you have for the strategic upgrading of Chinese auto brands?
Zhang Yun:We believe that for China to regain its status as the world’s largest economy, it needs modern equivalents of porcelain, silk and tea—the commodities that made China the world’s largest economy 200 years ago. In our view, new energy vehicles are the porcelain, silk and tea of the 21st century. They will undoubtedly bring continuous wealth into China from around the world.
Supported by fierce domestic competition and national strategy, China has built globally leading supply chain and manufacturing capabilities. From Ries’ perspective, this has spawned many new categories—including range-extended EVs and pure EVs. Supported by the development of super technologies and AI, Chinese automakers now have pivotal opportunities in AI vehicles, future advanced driving and fully autonomous vehicles.
There is no doubt that China’s NEVs are highly competitive globally. A German automotive industry expert, as well as the Chairman of CATL, have stated that without policy barriers, Chinese NEVs could capture over 70% of the global market, or even more. We fully agree with this assessment. Our opportunities are enormous.
A key direction for upgrading is to move beyond cutthroat domestic internal competition. While such competition helped eliminate low-efficiency players in the early stages, prolonged infighting will hurt all automakers. With over 300 domestic brands now narrowed down to roughly a dozen influential ones, the industry has entered a new phase. The priority is to grasp super technologies such as AI and build global brands.
I want to emphasize two points:First, over the past decade, Chinese NEVs competed on energy forms—range extension, hybrid technologies (including BYD’s ultra-hybrid), pure electrification and supply chain strength. The future will be driven by super technologies, especially AI. Although the U.S. led in early AI research, China now leads in AI application scale on an open-source system. For a long time, China was a follower and imitator in technology and automotive sectors. Today, we have the chance to lead, supported by our strong supply chain, creating new categories and new species—such as the AI vehicles we work on with XPeng. When true autonomous driving arrives, mobility will return to a carriage-like experience: a comfortable space that requires no human operation.
Second, global brands. Only brands deliver premiums. We must not only sell products but also occupy consumers’ minds. We are assisting XPeng in building its brand and formulating its strategy in Europe. One story left a deep impression on me: despite China’s global reputation as a tech leader, when I spoke with a European customer who bought the XPeng G9 at over €50,000—more than twice its domestic price—he told me his neighbors initially laughed at him for buying an expensive, unknown Chinese brand. He was won over purely by the experience and technology. After his purchase, many neighbors followed suit. When I asked how he rated Chinese cars represented by this model, he said:“It is a generation ahead of Mercedes-Benz in electrification and intelligence.”
Innovation and branding cannot be separated. Only innovation builds a brand; otherwise, products become homogeneous, forcing competition on low cost and low price. As our positioning and category innovation theory states: either you have price, or you have differentiation. Chinese automakers relied on price in the past; the future depends on differentiation.
Q2: Since last year, many new brands have emerged. Initially, tech companies and EV startups led the way, but now traditional and joint-venture brands are also launching new marques in China. Do these new brands still have a chance? Why are so many new brands emerging, and is it possible for them to overtake the leaders?
Zhang Yun:Going forward, we will likely see BBA, Volkswagen, Toyota, Honda and others launch dedicated NEV brands.
From Ries’ perspective, this is the only path forward, because it relates to consumer perception. Ries’ theory centers on how global consumer cognition reshapes corporate strategy and innovation. BBA’s strength—its century-long leadership in fuel vehicles—has become a weakness: consumers simply do not associate these legacy brands with leadership in NEVs and intelligent technologies.
A decade ago, Ries already stated that the new energy market belongs to new categories and new brands.
Four years ago, I held a dialogue with Hermann Simon, the father of “Hidden Champions” in Europe. I argued that the biggest problem for European automakers is using old brands in the NEV era. Eight years ago, I attended the Munich Motor Show with Great Wall Motors’ chairman; BMW’s i3, i5 and i8 were already on display. Yet today, when people think of electric cars, do they think of BMW? Toyota? Volkswagen? No. The current leaders in NEVs are mostly new brands—Tesla, and BYD, which focused on this category from the start.
In my view, traditional automakers must launch new brands to build real competitiveness in consumers’ minds for NEVs. Current moves are corrections, albeit belated ones. To our credit, most Chinese automakers have launched new brands for their NEV lines—partly, we believe, due to Ries’ influence. This is a highly positive step.
Do they still have a chance? Launching a new brand alone is not enough. It must be backed by new categories and real innovation. Opportunities still exist, especially in autonomous driving. However, the timing is late, challenges are enormous, but success remains possible.
Q3: What new AI-driven categories do you expect to emerge? Which traditional categories will be disrupted by AI?
Zhang Yun:The most important new category driven by AI will undoubtedly be autonomous and fully self-driving vehicles. More than a decade has passed since Tesla first envisioned this goal, but breakthrough progress has come only in the past two to three years, especially the past year. The pathways to advanced driver assistance and autonomous driving evolve rapidly and dramatically each year—from the latest FSD to XPeng’s XLA 2.0. These advances paint a clear picture of a driverless future, representing a massive new category.
There are two approaches to seizing this opportunity:
Incremental small improvements, which most automakers pursue, will not be enough.
Even worse, relying on suppliers for core technology will guarantee failure.
This opportunity belongs exclusively to companies with exclusive and leading technology—such as Tesla, and XPeng, which continues heavy investment. When XPeng launched XLA 2.0, He Xiaopeng made a striking comment: the company invests 300 million yuan monthly in intelligent driving. While the pressure is intense, sustained investment will bear fruit.
The intelligent driving era will accelerate the phase-out of fuel vehicles beyond expectations—even hybrids and ultra-hybrids. Autonomous driving relies heavily on electronic response speed, which is far slower in fuel-based architectures. As Academician Ouyang has repeatedly noted, fuel platforms cannot match the responsiveness of electric platforms. The widespread adoption of intelligent driving will further speed up the demise of fuel vehicles.
Ries’ judgment is clear:In the future, hybrids will become the new fuel vehicles.Since the endgame is full electrification, hybrids will be relegated to an intermediate status. The intelligent driving era will accelerate the decline and elimination of fuel vehicles, hybrids and ultra-hybrids alike.
Q4: The auto industry is facing “volume growth without profit growth.” Many say profits are captured by CATL, chipmakers and battery suppliers. How can automakers reverse this?
Zhang Yun:Years ago, an American colleague told me:“If every stall at a market sells identical dumplings, the only one making money is the one selling dumpling wrappers.”
This perfectly describes the current situation: automakers struggle with losses while battery suppliers profit. The root cause is homogeneous competition and cutthroat internal rivalry.
Past growth relied on imitation and price wars. Lack of profit stems from lack of unique value. The solution returns to our core principle:either you have price, or you have differentiation.The industry must shift toward differentiation and genuine innovation.
Many Chinese automakers have made incremental product innovations, but these are easily copied and quickly homogenized, forcing brands back to price competition. What matters is strategic innovation—creating something truly distinct.
Second, more Chinese automakers are finding profitability in overseas markets, where competition is less cutthroat. This pattern applies across industries, from home appliances to beverage chains. Overseas distributors often earn several times the margin of their domestic counterparts, due to lower competitive intensity and more rational competition logic.
To break the cycle, we must return to high-quality development: turn product and technological innovation into category innovation.
Take Subaru for example. In the hyper-competitive U.S. fuel vehicle market, most automakers struggled to profit, but Subaru thrived. It invented all-wheel-drive (AWD) technology for urban use but remained unprofitable while producing both 2WD and 4WD vehicles. Only after discontinuing 2WD and focusing exclusively on AWD did it create a new category: dedicated 4WD vehicles. Consumers immediately associated Subaru with AWD, leading to industry-leading profitability.
This is the path for China’s auto industry: turn technological and product innovation into a defined new category, focus on it, and earn differentiated profits through differentiated positioning.
Q5: Over the past three to four years, Huawei and Xiaomi have dramatically increased their presence in China’s auto market, with rapidly growing share. Can tech giants with strong brand equity like Huawei and Xiaomi build successful auto brands without category innovation?
Zhang Yun:The probability is very low. Huawei and Xiaomi differ significantly, however.
Huawei is a super-technology company on par with Tesla. Its advantage is obvious when compared to other tech entrants: Huawei’s global tech leadership, forged amid U.S. sanctions on 5G, is already recognized by consumers. Most automakers must market themselves as tech leaders; Huawei does not need to—it is a given. Huawei also excels at product definition.
Moreover, Huawei’s successful automotive products align with category innovation.AITO initially underperformed as a pure EV, despite Huawei’s technology. Its turning point came when it shifted to range-extended EVs—a format that perfectly matched consumer demand for “an EV without range anxiety.” This alignment with category logic drove its success.
Huawei’s other automotive partnerships target smaller niches, such as luxury-focused models centered on rear-seat experience. While innovative, these are limited in scale. AITO succeeded because it created genuine category differentiation; other lines remained too similar to stand out.
As for Xiaomi, it has also pursued category innovation. Xiaomi SU7 brought high-performance electric sports cars within mass-market reach, with a large, focused single model launch—an approach shared by Li Auto and Xiaomi, and a classic category innovation strategy.
China’s technology sector has reached an inflection point, with super technologies such as DeepSeek achieving global parity and leadership. If we still rely on shortcuts, imitation and marginally differentiated products for short-term marketing gains, it will be nearly impossible to build truly world-class automotive brands.