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in 1984, beijing automobile works and american motors corporation (amc) established a joint venture company, beijing jeep, announcing the establishment of china's first joint venture auto company. the following year, the establishment of shanghai volkswagen made the chinese auto market have its first sedan joint venture. after that, a series of auto companies from germany, france, the united states, and japan successively established joint ventures in china. joint ventures such as faw-volkswagen, saic-gm, gac toyota, beijing hyundai, and dongfeng citroen officially began to accelerate their pace in the chinese market, bringing countless classic domestic models to the chinese auto market.

but behind all this, countless chinese automotive people also understand that because independent brands lack r&d capabilities and technical reserves, they have chosen the strategy of exchanging market for technology.in the decision-making system of many joint ventures, the foreign party has considerable say due to its control over products.

as the chinese often say, "everything changes with time." more than a decade ago, domestic brands began to vigorously develop new energy vehicles. this year, electric vehicles account for more than 50% of the new car market. some chinese car companies began to provide technology and platforms to foreign brands, which gave rise to a new form of cooperation: reverse joint ventures.

what factors led to this joint venture, and what did chinese and foreign automakers gain from it? this article will analyze it from three points.

helping chinese car companies to expand overseas

going overseas is definitely a hot topic for chinese electric vehicles. promoting sales is one aspect, while improving brand image and achieving globalization strengthens the overall competitiveness of enterprises at a higher level. however, everyone knows that going overseas is not easy. it takes time and a lot of detours for chinese car companies to quickly penetrate. the benefits of choosing a joint venture with a foreign car company are reflected:help chinese automakers reduce burdens and obstacles in the process of expanding overseas markets.

in october last year, leapmotor and stellantis group established a global strategic partnership. it became the first cooperation project between a chinese new-energy vehicle company and a multinational auto giant. in may of this year, the two companies announced the establishment of leapmotor international and began operations to go overseas in a cooperative manner. zhu jiangming, chairman of leapmotor, said: for china's new energy vehicles to go global, regional uncertainty in the future will be a problem. at this time, stellantis' overseas dealers, parts distribution outlets, and factories around the world will come in handy. utilizing stellantis' global factory manufacturing resources, leapmotor can quickly localize manufacturing and solve problems such as tariffs. from a brand perspective, zhu jiangming also believes that with the endorsement of stellantis, overseas users will be more confident in choosing products from new forces.

image source: leapmotor. left: carlos tavares, global ceo of stellantis group. right: zhu jiangming, founder, chairman and ceo of leapmotor technology.

in june this year, i visited several chinese automakers’ dealers/direct stores in europe, and many of them told me:going overseas may seem simple, but developing a sales network, after-sales service outlets, and spare parts warehousing requires a lot of time and resources.thanks to stellantis, leapmotor has accelerated its expansion into europe. they plan to introduce leapmotor models in nine european countries this year, including belgium, france, italy, germany, greece, the netherlands, romania, spain, and portugal. among them, the sales outlets will be expanded to 200. in addition, starting from the fourth quarter of this year, they will also expand their overseas markets to south america, the middle east, and the asia-pacific region.

amy, a marketing manager involved in the expansion of chinese brands into europe, told the author: a big difficulty that chinese car companies will face when expanding into europe is what marketing strategy to use to communicate with european users and what the local catalyst habits are. chinese brands are very familiar with information distribution through content channels such as wechat and douyin. however, the average age of electric car users in europe may be between 45 and 55 years old. this user group still uses newspapers as an important medium for obtaining information. it takes time for chinese car companies to quickly penetrate. with the help of stellantis dealers and local marketing experience, leapmotor can avoid many detours and communicate with european consumers with a more mature mindset.

leveraging the brand power of foreign-funded automakers to promote overseas expansion is not only leapmotor’s idea, but also chery and changan.in april this year, yin tongyue, chairman of chery, announced that two major european luxury brands would use chery's platform to build high-end models. in june this year, the previous news was officially announced: jaguar land rover and chery signed a letter of intent for strategic cooperation, authorizing chery jaguar land rover to use the "freelander" brand on new electric vehicles. the new product line will also use chery's pure electric platform and will still be put into production at the changshu factory. the official announcement of chery and jaguar land rover also revealed that freelander will launch a series of electrified products in the chinese market through a specific network and will be exported overseas in the future.

in august this year, mazda and changan automobile signed an electric vehicle export cooperation agreement. changan mazda will become a new energy vehicle r&d and production base for the global market. mazda officials also confirmed that ez-6 will become mazda's first new energy strategic model in the world and will be sold in the european market starting in the fall. it can be understood that the platform model of changan deep blue sl03 has achieved european export.

amy told me: cars originated in europe, and european users have extremely high brand loyalty when making car purchase decisions, so they are definitely "very fond of european independent brands." most chinese car brands are not so familiar. it is not easy for chinese brands to build trust with local users. but after the reverse joint venture, the problem will become simpler. european users may not all know leapmotor, chery and changan, but they must know stellantis and jaguar land rover.

foreign brands reduce r&d costs and risks

more than one car company founder/ceo has admitted this:in the high-end electric vehicle market, apart from tesla, there is currently no other car company that has truly achieved profitability.under this situation, if traditional foreign brands invest heavily in pure electric technology or platform development, the risk is extremely high. it is obviously unrealistic to convert oil to electricity, and they will be labeled as "unsophisticated electric vehicles". choosing ready-made platforms and technologies developed by chinese automakers can reduce r&d costs. even if the product sales are average, the investment is limited and the risk is easy to control.

carlos tavares, global ceo of stellantis group, mentioned one point: they want to further implement the asset-light strategy, and the cooperation with leapmotor can actually consolidate this strategy and help the company complete the transformation of its business model. the same is true for the cooperation between jaguar land rover and chery. john (pseudonym), a tier 1 product development director, believes that instead of spending tens of billions of dollars and several years to develop a pure electric platform, jaguar land rover’s choice to cooperate with chery is actually a more efficient choice. if foreign brands engage in electric vehicle research and development from the entire vehicle platform at this time, it will not only be much more expensive than direct cooperation, but more importantly, judging from their pace, the research and development cycle will definitely be very long. after the product sop, the market share has long been firmly locked by competing products.

image source: changan mazda

this is even more true for japanese niche brands like mazda. limited by sales volume and product line lineup, the platform replacement cycle is actually very long. in the past 20 years, in the chinese market, there have been only three generations of models, from the original mazda 6 to ruiyi and then to atez. the general manager of a former faw mazda dealer told the author: mazda's product strength is good, but the research and development resources and investment of niche brands are limited after all, and they can no longer keep up with the pace of volkswagen and toyota. in his opinion, mazda's investment in the era of fuel vehicles is not enough, and it is indeed unrealistic to invest heavily in the research and development of electrification platforms. this is the same as jaguar land rover. since the joint venture has a ready-made platform available, choosing changan is a correct decision. in addition, the two parties already have the operating experience and cooperation framework of the joint venture, and the management and communication costs are much lower. this is why changan mazda ez-6 can be landed so quickly.

whether the reverse joint venture will be successful remains to be seen

reverse joint ventures have advantages for both chinese and foreign parties. however, judging from the cooperation strategies of foreign brands, especially luxury brands, they are optimistic but cautious about reverse joint ventures.the most obvious point is the high attention and protection paid to its own parent brand.

audi, a first-tier luxury brand, has also started its "reverse joint venture" journey. in july last year, saic group announced that it had signed a memorandum of understanding with audi, and the two parties will accelerate the development of saic audi's new electric models based on their respective advantages. in may of this year, the two parties formally signed a cooperation agreement to jointly develop a number of high-end smart electric new vehicles for saic audi, and jointly develop the advanced digitized platform. the first product is expected to be officially launched in 2025.

image source: saic audi

according to the author’s understanding, the internal code name of the new electric car jointly developed by the two parties is “purple”, and it uses zhiji’s current vehicle electronic and electrical architecture platform. however, according to foreign media reuters, the car may not use the audi four-ring logo, and may use the letters “audi” instead. in response to this, saic group, audi china and saic audi all responded: “there is no official news yet.

amy, a salesperson at faw audi, told me that if audi did this, it was to some extent worried about whether the new car would affect the audi brand and its other models. after all, in addition to saic audi's a7l, q5 e-tron and q6, audi also has a large number of models and market share in the chinese market that rely on another joint venture: faw audi.

audi is not the only luxury brand that has similar considerations. a jaguar land rover dealer staff member also told the author: jaguar land rover's choice to revive the freelander brand, rather than testing the waters with other products such as the range rover, is a relatively safe choice.if the market is willing to pay, this strategy can be applied to higher-level suv models. on the contrary, if the market response is average, land rover can also cut the pure electric model of freelander to minimize the brand damage to flagship products such as range rover.

after years of joint ventures, the role exchange has begun to rapidly change in the era of electrification. while creating opportunities, risks are inevitable. judging from the joint venture strategies of audi and jaguar land rover, they are also controlling risks based on market reactions. starting next year, a number of reverse joint venture electric vehicles will enter the market. will users pay for them? both chinese and foreign car companies are waiting for the answer.