Auto Show in Shanghai: Mercedes aims to score points in China with new products – Nio sticks to Europe

Gasoline is a thing of the past: At China's most important auto show, which begins Wednesday in Shanghai, everything revolves around electric innovations. Once again, it should be added. After all, China has been a leading market for e-mobility for years. More than 100 new models, most of them electric vehicles, are expected in Shanghai.

The Chinese Automobile Industry Association is confident that the 50 percent electric share of new car sales mark will be exceeded “easily” this year.

However, competition is fierce. Tesla's market entry in 2020, in particular, has prompted Chinese automakers to innovate, launch products, and optimize costs, says UBS analyst Paul Gong . An electric car now costs about half as much in China as it does in the Western world.

The price war is already entering its third year. Recently, almost all major manufacturers have lowered their prices again or offered incentive programs. The result: shrinking margins, losses, and overcapacity. Bankruptcies are on the rise.

One of the clear winners recently was BYD from Shenzhen. With affordable electric models, the company appeals to the masses. In the first quarter of 2025, BYD sold nearly 700,000 electric and plug-in vehicles in China. Its market share is around 29 percent, more than the next four largest providers combined. BYD has overtaken not only Tesla but also the traditional market leaders in combustion engines.

Li Auto is also growing rapidly. The SUV specialist is focusing on so-called range-extending hybrids in the premium segment, in which the electric motor powers the car while a combustion engine charges the battery. With this concept, the company more than doubled its sales figures in 2024 and is now in the black. Geely, which owns brands such as Zeekr and Lynk & Co., is also among the rising stars.

Meanwhile, Chinese brands are increasingly looking abroad. Despite very low sales figures, the Chinese car brand Nio plans to remain in Germany and Europe. "In Europe, customer satisfaction is our top priority," said Nio CEO William Li (50) in Shanghai. It doesn't matter whether it's thousands or hundreds of customers.

Manufacturers are also pushing into South America and Southeast Asia. However, fearing a flood of cheap Chinese cars, the EU and even China's close partner Russia are tightening trade barriers. As a result, experts say Beijing's electric car exports are likely to grow more slowly this year.

But major tech companies are also shaking up the Chinese market. Xiaomi , known for its smartphones, successfully launched its first electric sedan, the SU7, in 2024. Xiaomi focuses on "a lot of technology for the money." Huawei is also active, supplying its software expertise to at least seven automakers. In Huawei stores, the vehicles are displayed next to the smartphones.

Foreign manufacturers, on the other hand, are under pressure. Their electric models often play only a supporting role. The continued decline of German brands in China is also due to their own shortcomings, says automotive expert Zhong Shi . "German cars can definitely maintain a certain market share in China, but it depends on who wins— Volkswagen or BMW and Mercedes," he explains. Volkswagen, BMW, and Mercedes-Benz are sometimes considered outdated by many customers.

Manufacturers are now focusing on the needs of Chinese customers. Connectivity and digital cockpits – the smartphone on wheels – are in demand. Analyst Gong advises foreign companies to no longer view China solely as a production location, but rather as a global research and development center. In his view, they benefit from linking trust in their brands with the latest technologies developed in China.

Mercedes aims to regain a stronger foothold in China with more infotainment and new products. "We will present the most efficient and intelligent cars we have ever built," said Mercedes-Benz CEO Ola Källenius (55) in Shanghai. He referred to them as "supercomputers on wheels."

China is the most important market for the Swabian company and important for technological innovations, said Källenius. During his meeting with President and Party leader Xi Jinping (71), he emphasized that China and Mercedes share a "deep friendship." Mercedes is also working with ByteDance , the company behind the social media app TikTok, to integrate its artificial intelligence model into Mercedes cars in China, Källenius explained.

On the eve of the Shanghai Auto Show, Mercedes unveiled a long-wheelbase version of its CLA electric car model, designed for the Chinese market, with a range of more than 860 kilometers. Mercedes also showcased the Vision V, a non-commercial version of a van.

The Stuttgart-based company has been struggling recently in China. Although Mercedes still sold more than one in three cars in China, with 152,800 vehicles, sales fell by a tenth at the beginning of the year. Mercedes' new China boss, Oliver Thöne (41), one of four new board members tasked with rescuing Mercedes CEO Källenius , is expected to reverse the trend.