Automotive Industry Global Updates – Asia

Please join us for the next installment of the Morgan Lewis Automotive Hour Webinar series, focused on automotive industry global updates in Asia.

Questions? Please contact Octavia Litvinov.

Morgan Lewis Automotive Hour is a series of automotive and mobility industry–focused webinars led by members of the Morgan Lewis global automotive team. The 2024 program is designed to provide a comprehensive overview on a variety of topics related to clients in the automotive and mobility industry.

Key Takeaways

As the global automotive industry recalibrates amid geopolitical tensions, regulatory changes, and technological advancements, Asia stands as a focal point for transformative developments. The following key trends and insights emphasize the pivotal role of China and Japan in shaping the sector’s trajectory.

Global Automotive Market Trends

• Market Normalization and Challenges
  • A slowdown in car registrations reflects competitive pressures and uncertain market dynamics, driving reduced pricing power and profit margins.
  • The electric vehicle (EV) segment continues to grow despite challenges, with significant strides in Europe and China.
• Geopolitical and Economic Impacts
  • Tensions and economic fluctuations impact automotive supply chains, especially for EVs.
  • Regulatory shifts create opportunities and hurdles, influencing market players globally.

Spotlight on China: EV Leadership and Regulatory Complexity

China’s ascent as a global automotive powerhouse is underpinned by its dominance in the EV sector, supported by favorable policies and robust domestic demand.

• Historical Evolution
  • From the establishment of joint ventures in the 1980s to the rise of domestic brands, China’s journey is highlighted by rapid industrial growth and innovation.
  • Recent milestones include surpassing Japan as the world’s largest auto exporter in 2023.
• Regulatory Landscape
  • Adjustments in new energy vehicle subsidies and stringent China 6b emission standards compel automakers to innovate while managing compliance costs.
  • Data security regulations such as the Personal Information Protection Law and Data Security Law demand localization of sensitive vehicle data, complicating operations for connected and autonomous vehicles.
• Global Strategy Amid Tariffs
  • Chinese automakers address overcapacity by expanding into global markets, building overseas plants, and navigating tariff challenges.
  • Investigations into state subsidies in the EU and US cybersecurity concerns further test their adaptability.

Japan’s Automotive Horizon: Innovation and Stability

Unlike its neighbor, Japan’s automotive industry maintains regulatory stability but positions itself for green and digital innovation.

• Green Innovation Fund: Japan’s $2 trillion Green Innovation Fund underscores its commitment to achieving carbon neutrality by 2050, focusing on priorities such as next-generation renewable energy, hydrogen industries, and advancements in EV batteries.
• Rideshare Experimentation: Limited deregulation of ridesharing services marks a cautious step toward greater mobility flexibility, pending broader political consensus.
• Political Influence: The upcoming leadership election of the Liberal Democratic Party could shape policies influencing ridesharing, semiconductors, and next-gen energy solutions.

Technological Advances Redefining Mobility

Across Asia and beyond, three pillars are driving the future of mobility:

• Electric Vehicles: Innovations in battery technology and market penetration by leading brands are changing the composition of the industry.
• Autonomous Vehicles: Innovations in self-driving technologies amid evolving liability, privacy, and regulatory frameworks are powering progress in this space.
• Shared Mobility: The growth of ride-hailing and car-sharing services, backed by public-private partnerships, is shifting people’s relationships with automobiles.

Key Takeaways for Industry Stakeholders

• Monitor Regulatory and Geopolitical Dynamics: Anticipate sanctions, data security laws, and supply chain challenges.
• Diversify Supply Chains: Mitigate risks associated with geopolitical and regulatory disruptions by expanding sourcing networks.
• Engage with Policymakers: Proactively participate in shaping regulations that impact global automotive strategies.