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Mar. 17, 2026
At the 2026 China International New Energy Vehicle Supply Chain Conference (ICV Supply Chain 4.0 Conference), Dr. Johann Wieland, former CEO of Brilliance BMW and an independent automotive expert, delivered a keynote speech. Standing at the crossroads of the automotive industry’s transformation, he not only reflected on the industry’s growing pains over the past two years but also provided an in-depth breakdown of “software/AI-defined vehicles,” the logic of globalization, and the profitability bottom line for enterprises.
Below is a summary of the key points from this speech:
Dr. Wieland recalled that two years ago, when he stood on the same stage, the automotive industry was in a highly tense phase.
At that time, governments and automakers were pushing for the industry to scale up and develop higher quality, while accelerating the adoption of electric vehicles. Capital markets were also pouring large amounts of investment into the clean energy sector, providing financial support for the electrification transformation.
However, this rapid expansion soon revealed its downside. In the Chinese market, the competition in the new energy vehicle sector quickly escalated into an intense price war. Automakers lowered prices to boost sales, but their profit margins continued to shrink. This pressure soon spread across the entire industry chain. Suppliers' profits were squeezed, dealers faced mounting inventory pressure, and many companies began to realize that relying solely on scale expansion could not build long-term competitiveness. Dr. Wieland pointed out that within the industry, there was already a growing sense of reflection: if everyone competes on price, the entire value chain will ultimately suffer. As a result, discussions on sustainability, profitability, and industry structure adjustments began to emerge.
Two years later, the atmosphere in the automotive industry has undergone a significant change.
In Dr. Wieland's view, many companies have realized that relying solely on scale growth cannot solve the problem and have started to re-evaluate their strategic paths.
Some large automotive companies are adjusting their investment structures, focusing more on the profitability of projects rather than simply pursuing technological scale or market share. This shift can be observed globally. Many automakers are reassessing the pace of their electrification investments, with a greater focus on cash flow, profitability, and project return cycles. Dr. Wieland sees this as a rational return to fundamentals.
He emphasized that while technological innovation is undoubtedly important, any company must face a basic business reality: if technological investments do not generate sustainable cash flow, even the most advanced technology cannot be maintained in the long term. The automotive industry is essentially a high-investment, high-fixed-cost sector. If sales cannot cover the cost structure, companies can easily fall into financial trouble. As a result, profitability has once again become one of the most important strategic indicators in the industry.
In his speech, Dr. Wieland repeatedly emphasized a core principle: the success of the automotive industry is ultimately determined by consumers. In recent years, industry discussions have often focused on technical topics such as powertrains, battery technology, or autonomous driving. However, from the consumer's perspective, they care about more than just the powertrain. Vehicle size, safety performance, digital experience, in-car entertainment systems, and overall design all influence purchasing decisions. Therefore, when formulating strategies, companies must return to the most fundamental question: what kind of product do consumers really need? Dr. Wieland believes that this consumer-centric approach is essentially the "most democratic business logic," as the market will determine through actual purchasing behavior which technologies succeed.
In the current geopolitical environment, there has been increasing discussion about "de-globalization" in various industries. However, Dr. Wieland believes that, in the automotive industry, the globalization of technology remains an irreversible trend. The automotive industry itself is highly globalized. Different countries possess unique advantages in terms of technology, supply chains, and markets. Therefore, companies must seek the best partners worldwide. He pointed out that consumers do not overly concern themselves with where a product is developed or manufactured; they care more about product quality, technological level, and price. As long as the product is outstanding, the market will ultimately recognize it. This is why Chinese automotive products have garnered increasing attention in global markets in recent years.
In his speech, Dr. Wieland frequently mentioned the changes in the Chinese automotive industry in recent years. For a long time, Chinese consumers preferred automotive brands from Europe, Japan, or the United States because these brands had clear advantages in design, technology, and quality. However, this situation is changing. Chinese automotive brands have significantly narrowed the gap in innovation and product quality compared to traditional international brands. More importantly, Chinese companies have gained a clear advantage in digital capabilities. As the automotive industry shifts towards software-defined vehicles, the importance of software capabilities has rapidly increased. In this field, Chinese companies are demonstrating a faster pace of innovation.
Dr. Wieland believes that the most significant change in the automotive industry today is not electrification, but software. In the era of traditional vehicles, car performance was primarily determined by mechanical systems. Today, however, software has become one of the most important components of a vehicle. Software not only controls vehicle functions but also allows for continuous performance improvements through OTA (over-the-air) updates. This shift means that automotive products are no longer a one-time delivery but are continuously evolving products. Moreover, the automotive industry is now entering the stage of AI-defined vehicles. AI will gradually take over more and more functions, including intelligent driving, smart cabins, and vehicle management systems. In this process, Chinese companies are becoming one of the leading forces globally. For example, in the area of intelligent cabin experiences, the Chinese market has become one of the most innovative regions in the world.
As the importance of software and artificial intelligence continues to rise in automobiles, the structure of the automotive supply chain is also undergoing changes. The traditional automotive supply chain primarily focused on mechanical components. However, in the era of software-defined vehicles, data, algorithms, and cloud services are becoming the new key resources. Vehicles will increasingly rely on connectivity and cloud services. Through cloud platforms, vehicles can continuously receive new features and services. In this new industry ecosystem, data has become an essential production factor. Therefore, companies need to establish more open data systems while avoiding excessive reliance on closed databases.
Despite the rapid development of new energy vehicles, Dr. Wieland pointed out that their profitability model still faces challenges. Compared to traditional internal combustion engine vehicles, new energy vehicles have a higher key cost structure. The battery system is one of the most significant cost sources. From an energy density perspective, gasoline still has much higher energy density than current mainstream lithium batteries. This means that electric vehicles still have a natural disadvantage in terms of energy storage costs. At the same time, consumers are highly sensitive to prices. This creates a core contradiction for the new energy vehicle industry: high technology costs, but limited market price tolerance. In this situation, if companies blindly expand production capacity, it could increase financial risks.
Dr. Wieland mentioned that the price war in the Chinese automotive market over the past few years has consumed a significant amount of resources. Under intense competition, some companies have been continuously lowering prices to capture market share. However, this approach is difficult to sustain in the long term. The cost structure of the automotive industry dictates that companies must maintain healthy profit margins. If the entire value chain remains in a low-profit state for an extended period, suppliers, dealers, and even automakers will be affected. Therefore, the industry needs to find a more sustainable development path.
At the end of his speech, Dr. Wieland shared a phenomenon he has long observed. Many large companies, after achieving success, tend to become complacent, bureaucratic, and even gradually lose their ability to innovate. This is not uncommon in the global automotive industry. However, in an era of rapid technological change, this state can quickly cause companies to lose their competitive edge. Therefore, he believes that companies must maintain humility and continuously learn from the best practices around the world. The rapid development of the Chinese automotive industry itself is an important case. However, he also emphasized that the Chinese experience should not be simply replicated. Each market needs to adjust according to its own circumstances.
At the end of his speech, Dr. Wieland quoted a famous line from BMW's legendary CEO, Eberhard von Kuenheim: "The big will not eat the small; the fast will eat the slow." In his view, this statement remains relevant in today’s automotive industry. Technological change is accelerating, and market competition is constantly evolving. Whether a company succeeds will depend on its ability to learn faster and adjust its strategy more quickly than its competitors. In the future, the competition in the automotive industry will not just be about scale or technology; it will be a competition of learning speed and adaptability.
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