Borsen : Western car industry must understand the driving smartphone or be left behind - Automobility
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12 May Borsen : Western car industry must understand the driving smartphone or be left behind

Posted at 21:59h in Media Mentions by

Media Source : Borsen

As one of the only foreigners in China during the covid-19 crisis, Bill Russo was a first-hand witness to the Chinese electric car revolution. He explains what it takes to sell cars in China

STEEN BACHMANN, April 10, 2025

Borsen

Original article published in Danish language:

https://borsen.dk/nyheder/pleasure/vestlig-bilindustri-ma-forsta-den-korende-smartphone-eller-blive-kort-bagud

The Chinese plan to switch from fossil fuels to electricity dates back to 2005, but for the first many years there was no demand for electric cars. The state invested in charging infrastructure, and people complained about “zombie parking spaces” that were empty, but in 2020 two things happened that turned everything upside down: Tesla opened its first factory in China and covid-19 broke out.

Tesla began construction of the gigafactory in Shanghai in 2019, and just 18 months later they launched the Model 3 in China.

“And that’s when the world changed. Not because of Covid, but because consumers who until then were not interested in electric cars started shopping for them. First by looking at Tesla, but then they discovered that there were good Chinese products available from companies such as BYD in particular, but also other Chinese companies.” Bill Russo explains this to Børsen during his visit to Copenhagen, where he is the keynote speaker at IDA’s conference “Electricity in Road Transport”.

 

BILL RUSSO

  • Bill Russo is the founder and CEO of Shanghai-based Automobility Limited. He has over 40 years of experience in the automotive industry, including 15 years as the head of Chrysler in China.
  • He has lived in Shanghai for the past 20 years, from where he operates as a consultant, author, podcast host, and speaker.
  • Bill Russo is the Chairman of the Automotive Committee of the American Chamber of Commerce.

Stranded in China during Covid

From March 2020 to May 2022, he was stranded in China due to Covid-19. China was closed to foreigners, but Bill Russo was prevented from leaving – he lives in Shanghai with his Taiwanese wife. It was during this period that the Chinese brands began to gain market share. In 2020, they had a market share of 37 percent, but by 2022 it had already increased to 47 percent. Today it is 69 percent.

“It’s crazy. The foreign brands have lost so much. And the loss is across the board. It’s not one brand. It’s all of them. The leaders of the Western auto industry didn’t see the seriousness,” says Bill Russo.

The driving smartphone

The next big step in mobile technology will be flying drones, but before them comes the car, which is an extension of your smartphone. Bill Russo claims this because it’s already on the market in China. But what is it – all car manufacturers want to target cars at the buyer, right?

“Yes, but here it’s not about how many units you sell, it’s about how you can generate revenue from the use of your products. You can take a car like the Xiaomi SU7, which was launched in 2024. It’s disruptive because Xiaomi understands how to monetize a service platform with hundreds of millions of users. If you buy a device from Xiaomi, you’ll download their app. It will collect data and monetize you. Xiaomi’s car is fundamentally not just a car – it looks pretty cool, it looks like a Porsche Taycan – but it’s designed in a fundamentally user-centric way. It has much more focus on interactivity with the passenger and not just the driver.”

“It’s a paradigm shift in the way we think about cars. Before the smartphone, not many Chinese people really used the internet, but today everyone has a smartphone. And companies in the automotive industry know how to leverage data. A smart car is a different kind of smartphone, where they can interact with users in their daily lives. That’s what has changed.”

Porsche sales are down

But are there more cars that can?

“Well, if they can, why are Porsche sales down 35 percent last year and 40 percent in the first three months of this year? … I mean, I own a Porsche Cayenne, so don’t take me as someone who completely buys into the Chinese narrative. On a scale of 1 to 10, a Porsche Cayenne is about a 2 in terms of digital relevance. The only thing it does is support my Apple CarPlay. I had to go through a lot of hassle because I bought it from another private owner and had to struggle to get my Porsche ID associated with my car. It’s not designed to be a user-centric product—it’s designed to be a driving machine. And that’s what it is. But in China, people want a smartphone on wheels. And once you see what it is, you don’t want to buy a car that isn’t.”

“It happened to Nokia. Nobody needed a dumb phone anymore. Blackberry is also dead, even though it was pretty smart with its great keyboard. The Western world continues to make hardware and driver-centric products in a world that has shifted to user-centric design.”

“I had the co-founder of Nio on my podcast. He explained that if the finish line has moved, you have to aim for the new goal. There’s nothing that says Chinese consumers won’t buy a foreign brand, but you have to meet the minimum expectations of what that person expects the car to do for them. You have to give them something to brag about the car, beyond how it accelerates and brakes. It’s not about Team China winning. They just make a better product.”

 

“I had the co-founder of NIO on my podcast. He explained that if the finish line has moved, you have to aim for the new goal” Bill Russo

Tariff walls help China

Where does the Chinese auto industry stand today?

“An unintended consequence of building tariffs is that they actually do the opposite. They make China less self-reliant and more global. If the tariffs are there because we don’t want everything concentrated in one place and we don’t want everything to depend on one source, then it will force Chinese companies to build their factories elsewhere.”
“The resistance to that actually comes from the central government, which would rather keep jobs in China. So much of China’s export history up until now has been a history of overcapacity. It’s been: We built too many factories because we thought the market would grow. It hasn’t since 2017. So now we’re taking that built-up capacity and redirecting it to another target. And that’s everywhere else in the world. But if you build a tariff wall, they’re just redirecting capacity elsewhere. Trying to contain China actually accelerates the movement toward becoming less Chinese,” says Bill Russo, who in addition to being an analyst is also chairman of the American Chamber of Commerce’s auto committee.
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