Chinese carmakers have developed a revolutionary New Operating Model that has revolutionized the automotive industry, according to the latest report by AlixPartners.
The New Operating Model allows carmakers to bring vehicles to the market twice as fast, with 40 percent to 50 percent less investment and a 30 percent cost advantage, according to the AlixPartners 2025 Global Automotive Outlook released yesterday.
The ongoing revolution in the auto industry, driven by artificial intelligence, coincides with dramatic consolidation in the Chinese market. Of 129 brands selling new energy vehicles in China, only 15 are expected to attain financial viability by 2030, capturing three-quarters of the NEV market, according to the report. Meanwhile, some leading NEV players have already achieved full-year profitability.
"Chinese original equipment manufacturing exports have slowed due to tariffs and geopolitical uncertainty, but the export of China's New Operating Model -- driven by partnerships and joint ventures -- is gaining traction," said Zhang Yichao, partner of China Automotive Practice at AlixPartners.
Chinese brands are expected to seize 67 percent of the domestic market this year, while foreign competitors continue losing ground. By 2030, they are set to double their European market share to 10 percent through strategic localization efforts.
Chinese manufacturers will likely boost their annual production capacity in Europe by 800,000 vehicles by 2030, while their European counterparts could shutter 400,000 units in capacity, the equivalent of 1.5 production plants. This shift has triggered a portfolio restructuring, with European suppliers earmarking over USD18 billion in assets for disposal.
"China is one of the most competitive NEV markets in the world, with intense price wars, rapid innovation, and new entrants constantly raising the bar," said Stephen Dyer, Asia head of Automotive and Industrial Practice at AlixPartners. "This environment has driven remarkable advances in technology and cost efficiency."
China dominates in-car technology, from NEVs to advanced driver-assistance systems. AlixPartners forecast the global ADAS market will reach USD50 billion by 2030, with China's share surging to 45 percent.
However, challenges remain for Chinese car companies. The cost of new US tariffs is estimated to be around USD30 billion next year, prompting many firms to consider relocating supply chains out of China to mitigate the impact.
"As the next-generation automotive manufacturing evolves, OEMs must navigate shifting investment priorities, infrastructure constraints, and talent transformation to deploy AI with precision," Zhang noted.
AI-enabled tools can cut product development cycles to around eight months from five years and trim verification and validation costs by 20 percent, helping close about one-third of the gap to benchmark Chinese NEV makers' product development timing, according to AlixPartners.
