How long can companies maintain their competitive edge from the R&D phase to mass production of a new technology?
In China's automotive market, the answer is becoming increasingly short.
Smart features that were once rare quickly appear on cheaper models; technical advantages established recently may face new competitors before the investment is recouped.
Yet automakers and suppliers cannot stop innovating. Failing to innovate risks losing orders, while innovating does not guarantee sufficient returns.
On October 23, at the 14th Automotive & Environment Innovation Forum and the 8th Jinjie Award "China Solutions" Global Awards Ceremony, five executives from Renault, Mann+Hummel, Forvia Hella, Gentle Airbag, and Haiwei discussed a common challenge: As technological innovation accelerates, how can it be converted into genuine commercial value?
Some worry that technology becomes obsolete before launch; others advocate cutting features lacking real demand while still investing in unique innovations; some bet on products initially overlooked. Companies must not only determine which technologies are worth investing in but also navigate changes in R&D division and upstream resource competition.
Technologies Mature, Premiums Become Harder to Command
The cost advantage of Chinese NEVs (New Energy Vehicles) in certain core technology areas is approaching a new stage.
Su Weiming, Chairman and CEO of Renault Group China, noted a shift during the forum: Since 2026, the cost competitiveness of NEV-related technologies in areas such as the three-electric systems (battery, motor, control) and electronic/electrical architectures has strengthened further, bringing costs closer to those of internal combustion engine vehicles in these domains.
Whether technical advantages truly resonate with consumers is also worth considering. Su observed that in overseas markets like South America and Singapore, consumers purchasing NEVs care more about range, price, color, and charging time than specific parameters like battery capacity or motor power.
Regarding smart cockpits, he questioned some innovative investments lacking differentiation. If increased technical investment results in similar product experiences, it is difficult to form a unique competitive advantage.
A study by J.D. Power released in May 2026 on China's automotive intelligence experience provided another perspective: The industry's intelligence innovation index rose by 70 points year-on-year to 658, but the feature performance index declined for the first time in four years.
An increase in new features does not mean every feature delivers a better user experience.
Xu Jie, President of MANN+HUMMEL’s Global Passenger Car Division and President of its China Region, frankly stated at the forum that the company has faced similar challenges. Once a technology is developed, even if it delivers superior performance, if it enters the market one year late and fails to achieve timely commercial application, new technical routes and market demands may have already emerged. The original advantages will quickly be matched or even replaced.
"Today, the speed of bringing innovation to market matters more than the innovation itself."
Wang Chenglong, Vice President of Gentle Airbag and Managing Director for Asia, explained the commercial return of technological innovation from another angle.
He stated that Gentle Airbag will continue to pursue some "0-to-1" R&D, especially for products achieving uniqueness ('something others don't have'). "This can generate better premiums or a dividend period."
Whether technology creates differentiation, when it enters the market, and how long the lead lasts all influence the commercial return on innovation.
However, not all innovations can have their returns calculated clearly at the project initiation stage. Products without an established market are often harder to judge.
Features to Cut vs. NOMI Almost Underestimated
Discussing R&D trade-offs, Wang Chenglong stated that Gentle Airbag first assesses whether a technology meets real demand from the perspectives of OEMs and end-users. For low-frequency features lacking actual value, if confirmed unnecessary, investment is decisively stopped.
But how exactly should real demand be judged?
In August this year, after typhoons and heavy rains, Gasgoo conducted a survey on low-frequency vehicle capabilities. Among 390 participants, 46% believed that if a feature is useful in critical moments, it has value even if rarely used; another 44% felt such features could exist but should not significantly increase purchase costs.
Regarding willingness to pay, 34% of participants were unwilling to pay extra, while 36% were willing to pay up to CNY 3,000.
Low usage frequency does not necessarily imply lack of demand, and acknowledging a feature's value does not equate to willingness to bear its cost. Especially for safety and emergency capabilities, value cannot be judged solely by usage count, and some basic safety functions involve regulatory requirements.
For new products not yet in the market, consumer willingness to buy may be even harder to predict.
Li Linfeng, Founder and CEO of Haiwei, shared his experience co-developing NOMI with NIO during a roundtable discussion.
"When Haiwei took on the NIO NOMI project, our annual revenue was in the tens of millions level. Prior to this, NIO had been searching for partners in the industry for quite some time. Thanks to the customer's trust in Haiwei, our team completed product development and delivery in 18 months."
More noteworthy than the development process was the gap between market performance and initial expectations.
According to Li Linfeng, at project launch, the client estimated NOMI's optional installation rate would be around 30%. However, thanks to its unique product definition and user interaction experience, NOMI gradually gained market recognition, with the optional installation rate for related products consistently exceeding 80% later on.
Of course, this result had specific conditions. NIO's brand positioning, user base, and joint development between both parties likely influenced market acceptance. A high optional installation rate does not directly equate to high investment returns.
For existing products, companies can adjust based on actual usage and market feedback; for new products without an established market, demand may need verification through R&D and product implementation.
If companies insist on definite short-term returns, potential opportunities may be abandoned before validation. Conversely, if every vision for future experience warrants long-term investment, no matter how substantial the R&D budget, it will be depleted.
The difficulty lies not in choosing to innovate or stop, but in distinguishing whether a project has simply not yet proven its value or has already proven to lack value.
The former requires leaving space for market validation; the latter calls for timely loss-cutting.
Beyond Single Technologies, What Else Must Suppliers Compete On?
After determining whether a technology is worth investing in, companies must consider how to improve R&D efficiency.
Wang Chenglong mentioned that previously, Gentle Airbag's regional R&D efforts were relatively independent, leading to duplicate investments. Now, the company is strengthening global R&D synergy, designating China as a global innovation incubation center. For example, global R&D for ventilation products is led by the Shanghai team; after rapid iteration in the Chinese market, relevant technologies can be applied to global operations.
Similar shifts are occurring at Mann+Hummel. Xu Jie stated that China is growing from one of the world's largest automotive markets into a global source of innovation. Mann+Hummel established its Global NEV Technology Center in Shanghai, with Chinese teams leading R&D. Product definitions consider global compatibility from the start, combining innovation with speed. Leveraging Mann+Hummel's business network covering over 80 branches globally, innovation outcomes formed in the Chinese market can be replicated and implemented worldwide faster, accelerating the conversion from technological innovation to commercial value.
Globalizing R&D outcomes requires corresponding synergy mechanisms. According to Xu Jie, under the "In China, For Global" strategy, Mann+Hummel employs deep Headquarters-to-Headquarters (H2H) synergy to directly align with Chinese automakers' overseas strategies. Joint planning covers target market selection, product definition, and development rhythm to reduce resource waste and delays caused by intermediate steps.
Meanwhile, Gentle Airbag encourages engineers to develop business thinking, considering product pricing and customer willingness to pay during the R&D phase, rather than focusing solely on technology itself.
Heiko Lässig, General Manager of Forvia Hella's Asia-Pacific Headquarters and Executive Vice President of Financial Control for China, noted that while increasing R&D investment, the company continuously evaluates R&D effectiveness and adjusts technical directions promptly to reduce costs without sacrificing quality.
He categorized innovation into forward-looking R&D, customer-oriented product innovation, and manufacturing process improvements. Forward-looking R&D makes it hard to predetermine commercial returns; customer-oriented innovation must meet actual needs; process improvements allow easier calculation of investment returns.
From global R&D synergy to managing investments across different project types, suppliers are trying to enhance R&D efficiency. As OEMs expand in-house R&D scopes, Tier 1 suppliers must rethink their technical advantages and business boundaries.
"How do Tier 1 suppliers survive?" Li Linfeng raised this question on-site.
He believes a professional Tier 1 supplier can serve multiple OEMs simultaneously, spreading R&D costs in specific fields and forming specialized advantages. But now, many OEMs are pursuing full-stack self-research across multiple technology domains. "I've noticed our OEM clients are vertically integrating, so we can only find ways to explore upwards ourselves."
Li Linfeng revealed that Haiwei has begun allocating R&D resources to upstream areas such as materials, processes, and equipment.
For Haiwei, whose main business is cockpit displays, these investments are not simple diversification. Display materials, manufacturing processes, and equipment directly affect product performance, yield rates, and mass production costs. If relevant technologies can be reused across different client projects, there is an opportunity to build stronger competitive barriers.
However, pressure on suppliers comes not only from OEMs. Changes in supply and demand for upstream components are also affecting corporate R&D investment and mass production arrangements.
At the end of the roundtable, Li Linfeng mentioned that since the beginning of this year, PCBs (Printed Circuit Boards), MLCCs (Multilayer Ceramic Capacitors), and some chips have experienced price increases and supply fluctuations. He identified the rapid expansion of AI industry demand as a key factor and judged that the resource siphoning effect caused by the AI wave might last for 3-5 years.
This timeline judgment reflects Li Linfeng's personal view. However, previous research by TrendForce indicated that AI demand has driven some MLCC capacity towards high-end applications, squeezing the supply of certain automotive-grade specifications.
Supply and demand situations vary across different electronic components, but for some automotive suppliers, the familiar upstream procurement environment has started to change.
Li Linfeng disclosed that Haiwei is investing in some upstream enterprises and partners, and has signed long-term supply contracts with an overseas chip supplier to secure supply.
From extending R&D upstream to investing in partners and signing long-term supply contracts, Haiwei's measures cover both technical capability and supply assurance. For suppliers, whether innovation yields sustained returns depends not only on the technology itself but also on controlling costs and ensuring delivery.
Some technologies require racing against time before the window closes; some products need market validation to reveal initially underestimated value; other foundational capabilities cannot directly create premiums but determine whether products can be mass-produced stably.
In the automotive industry, investing wrongly in an innovation may mean wasted resources, but giving up too early may cause missing the next competitive opportunity.
What companies truly need to judge is which investments should be stopped promptly and which are worth persisting with.