Introduction
In recent years, the global automotive industry has been in the midst of a major transformation. In particular, major manufacturers in Japan and Europe are engaged in a fierce competition to accelerate the pace of new vehicle development to the extreme in order to counter the rise of electric vehicle (EV) companies from China.
Many people may wonder, "Why the rush?" and "How will safety be guaranteed?" This article will explain in detail the actions of Japanese and European manufacturers that have learned from the rapid development methods of Chinese companies, specific methods for shortening development time, and the technological and cultural changes behind them. Not only business people, but also anyone interested in automotive technological innovation will be able to see the future structure of the industry.
Reasons why the automotive industry is undergoing transformation:
Five major changes learned from the "development speed of Chinese companies."
The biggest change in the automotive industry in recent years is the shortening of new vehicle development cycles. What used to take major manufacturers about four years to develop a new car can now be done in just about 20 months. This phenomenon is a result of competition with Chinese EV manufacturers.
Ford Motor Company in the United States and EuropeRenaultExecutives from major automakers such as Renult and Volkswagen (VW) say that "speed is essential" to survive amidst "rapid technological advancements and changing consumer preferences" and "disruptions to supply chains due to geopolitical conflicts."
Particularly with Chinese companies developing new cars in an average of 20 months, competition across the automotive industry to develop new cars as quickly as possible without compromising safety has intensified. Understanding this trend is important not only from a technical standpoint, but also because it reveals a crucial turning point in business strategy.
Five specific methods and success stories for shortening development time.
Point 1: Eliminate waste by standardizing parts.
Chinese EV manufacturers and the Japanese Renault-Nissan partnership are shortening development time by increasing the number of common parts across different vehicle models. Jim Baumbick, Ford's head of European operations, points out that "Chinese automakers such as BYD have shortened development time by increasing the number of common parts."
In Renault's new EV, the Twingo, scheduled for release in 2026, approximately 451 TP3T of parts are common components manufactured in China. This allowed them to develop the new vehicle in half the time, less than two years. This can be considered a success story unique to established manufacturers.
Point 2: Use digital tools to virtually design and test.
Executives point out that the bigger change was a change in culture. This involved not only standardizing parts and manufacturing processes to reduce labor, but also...Design and test virtually using digital toolsThis reduces the time required for physical prototyping.
Nissan Motor's new EV, the "N7," was jointly developed with China's Dongfeng Motor Group over approximately two years and is scheduled to be launched in China in 2025 for under $20,000 (approximately 3.1 million yen). Exports to other markets are planned for 2026. Digital technology was essential to achieving this speed.
Point 3: Software-driven solutions to unresolved issues
According to research by AlixPartners, Chinese EV manufacturers conduct durability tests for an average of only 600,000 km per model, while automakers in other countries typically test for 3 million km. A key factor here is that Chinese companies are willing to update in-vehicle software via over-the-air (OTA) communications to fix unresolved issues and add new features.
Traditional automakers tend to wait until everything is fully confirmed before implementing something, fearing damage to their reputation. However, in an industry that changes very quickly, there is a risk of technology becoming outdated if the launch opportunity is missed.
Point 4: Work closely with the local development team.
At Renault's Shanghai Research and Development Center, approximately 150 locally hired engineers and specialists are working to accelerate the pace of development. "In Europe, it took three months of adjustments to design and specifically model a single part before manufacturing it, but in China, that has been reduced to one month. We are now getting used to it," they explained.
This collaboration with the local team is important not only for cost reduction but also for deepening our understanding of the culture and market.
Point 5: Accelerate decision-making with a flat organizational structure.
Newly entered Chinese automotive companies are more proactively transforming their workflows and taking risks. Their internal hierarchies are flat, and the car structures are relatively simple. They can adjust their speed and coordination perfectly, even in situations where "suppliers are scheduled to start production in three days."
Balancing safety and speed: Key risk management that companies should monitor.
Nissan Motor's Chief Financial Officer (CFO), Jeremy Papin, says shortening development cycles is "absolutely important," especially for companies that lack scale. "It's also a way to build cars that are extremely cost-competitive because it reduces the time spent on engineering and cuts costs," he explains.
However, safety is a crucial point to consider. CFO Papin acknowledges that "the transition from the digital stage to the stage of physically preparing the car requires approximately 12 months of 'uncompressible time' for the engineers." This must be understood as a significant constraint.
Expert warnings: Precautions when rushing development
Stephen Dyer, a Shanghai-based partner at the American consulting firm Alex Partners, points out that Chinese companies are becoming more proactive in transforming their workflows and taking risks. He notes that "competition with Chinese automakers has intensified the entire automotive industry, leading to fierce competition to develop new cars as quickly as possible without compromising safety," and that companies' attitudes are being put to the test.
Furthermore, a former advisor to a Japanese automobile company warned that "as the importance of software in new car development increases, some companies are risking 'stubbornly refusing to acknowledge' the need for faster development because they cannot change their production methods." He pointed out that "a safety-first culture is good in appropriate circumstances, but that culture is now clashing with the need for speed and transformation driven by software."
Points to note when partnering with Chinese companies
Nissan's CFO, Papin, said, "The initiatives we are pursuing globally are not simply inspired by our experience in China. We must accept the fact that we need to not only break away from conventional methods but also take greater risks in order to shorten development cycles."
However, since many major automakers have long relied on their extensive supply chains cultivated in their domestic markets, a reliance on Chinese suppliers could create problems. While the use of digital tools, such as "using the messaging app WhatsApp to make adjustments among members from each country," is important, excessive reliance on them poses risks.
Future Industry Outlook
Renault CEO François Propo stated, "To gain the competitiveness to compete with our Chinese rivals in Europe, we need a strong driving force." In addition to technological aspects such as the digitalization of design, cultural changes are also important, so a transformation of the corporate culture is also necessary.
Summary
The shortening of new vehicle development cycles in the automotive industry has implications beyond mere technological innovation. This trend, sparked by the rise of Chinese companies, represents a crucial turning point that tests the adaptability of businesses to changing business environments.
The key takeaway from this article is the importance of "balancing speed and safety." While shortening development time certainly leads to cost reductions and improved market competitiveness, there is also the physical constraint of "an uncompressible period of approximately 12 months." This is an important lesson, including the risk of compromising quality by rushing too much.
Furthermore, it's clear that "cultural changes" have a greater impact than technological aspects such as parts standardization and the use of digital tools. What we can learn from Chinese companies is their swift decision-making process and flexible organizational structure. If a "safety-first culture" becomes too rigid, it can lead to delays in adapting to change and become outdated.
The automotive industry isn't the only business world where the ability to embrace change is crucial. Technological innovation is accelerating daily, and many businesses are forced to break away from existing methods and take on new risks. However, it's essential to clearly define the purpose of these changes.
The dilemma of "the flexibility to evolve with the times" and "maintaining constancy amidst change" is common to all industries. In the automotive industry, shortening development cycles is the trend, but the commitment to essential safety and quality must remain unchanged.
The key lesson in my work is to constantly consider "balancing speed and quality" and "the balance between change and constancy." Instead of fearing change, I need to proactively learn and re-evaluate my own business model. The examples of Chinese companies offer profound lessons beyond mere technological superiority, including differences in market understanding and organizational culture.
The automotive industry is a mirror reflecting the future and offers important insights for us. In today's rapidly changing world, balancing flexibility and responsibility is key to sustainable development.
