Zhang Junyi on the Auto Industry’s Transformation at the 2023 Shanghai Show

Zhang Junyi studied automotive engineering at Tongji University before moving into strategy consulting and industry investment. He recalls co-founding NIO Capital and, at the time of the interview, leading Oliver Wyman’s automotive and industrial products business in Greater China.

He connects the development of China’s auto industry with long-term international cooperation: joint ventures brought technology and products while helping develop talent and business institutions.

In his account, Chinese companies initially learned more from overseas; as the market and their capabilities grew, Chinese demand began to shape vehicles more directly. Foreign automakers benefited from that market’s growth too.

He cites models developed for China and improvements by domestic manufacturers to illustrate that design and competition no longer involve technology moving only in one direction.

At the 2023 Shanghai auto show, Zhang believes some overseas colleagues were surprised partly because they had been unable to visit in person for years. In his view, major product and technology changes had already begun earlier.

He observed that some multinational executives stayed in China for extended visits, meeting suppliers, universities and entrepreneurs to better understand the local market and industrial ecosystem.

A German colleague found Chinese electric vehicles differed from expectations in design, human-machine interaction and product maturity. Zhang says differences in booth traffic also reflected shifting attention.

He cites a show organizer’s estimate that new-energy models accounted for about one-third of exhibited vehicles but may have attracted a much larger share of attention. The numbers and market judgments refer to that period.

Discussing brand displays, he says appeal at the show depended not just on established prestige but on whether companies presented new products, technologies and a clear direction for transition.

Tesla did not exhibit. Zhang offers his own interpretation, suggesting companies weigh show costs, publicity and wider marketing plans; he does not claim to know Tesla’s internal decision.

He argues Tesla’s scale and brand influence make its price adjustments prominent, and connects its strategy to the automotive industry’s history of reducing costs through manufacturing efficiency.

On the price cuts of the time, he argues that weaker-than-expected demand and expanded capacity both encouraged reductions, while acknowledging that this is his judgment. Not every company can gain enough additional sales by cutting prices.

He also notes that changes in material costs and inventory pressure can affect pricing. Companies face different costs and objectives, so a single cause does not explain every price cut.

He worries that a sustained price war can hurt profits, technology investment and consumer expectations; if buyers keep waiting for lower prices, reductions may become less effective at stimulating demand.

He does not expect a single company to satisfy every car buyer. For Tesla, he sees capacity and adaptation to local demand as factors affecting competitiveness.

He says Chinese automakers expanding abroad face scale, technology, cost and market-access considerations; domestic sales do not automatically translate into global competitiveness.

Discussing German automakers, they consider the relationship between traditional manufacturing strengths and electrification. Zhang says companies must protect existing businesses while adapting to new product and software demands.

He identifies authority over product definition as an organizational issue for multinationals: headquarters and local teams have different information, and shifting decisions encounters established interests and culture.

He contrasts Volkswagen’s relatively centralized decision-making with General Motors’ historically more distributed regional development, arguing that where decisions sit affects responsiveness to local demand.

Electric-vehicle economics also depend on local energy prices, infrastructure and regulation. He adds that emissions assessments can consider manufacturing and energy production, not only vehicle use.

Zhang says new and established automakers are learning from each other: incumbents build software and new-product skills, while entrants must develop manufacturing, safety and management capabilities. Learning speed and available resources matter.

He recalls investors valuing different kinds of automakers differently, and says executives must balance investor expectations with long-term strategy rather than simply chase fashionable themes.

He emphasizes the industry’s capital needs: a company can operate at a loss for a time, but must still watch cash flow, production spending and sales receipts.

Selling cars is difficult partly because development cycles are long. If a company misjudges product positioning, it may not be able to redesign as quickly as it could a consumer-electronics product.

He recalls that during supply-chain disruption, a single missing component could prevent delivery of an entire car. Teams had to manage interconnected risks involving transport, factory stoppages and parts supply.

He observes that companies increasingly target women and younger buyers, while reminding listeners that booth popularity is only one measure of appeal and actual market performance also matters.

Looking ahead from that moment, he says companies face post-pandemic recovery, electrification, environmental policies and geopolitical change at once, and must consider those variables together in planning.

On joint ventures, he argues Chinese partners need to contribute tangible value in technology, products or markets, and that partnership structures may change as capabilities evolve.

He says whether Chinese brands can establish themselves abroad over time is an important test of globalization, affected by market access and regional consumer preferences.

He remains optimistic about the industry while expecting digitalization and electrification to change supply chains and manufacturing. These forecasts reflect a 2023 perspective and are not guarantees of later outcomes.