Foreign automakers turn to China for lessons as reverse joint ventures emerge as a new trend

The global automotive landscape is undergoing profound transformation, prompting traditional giants like Volkswagen and Toyota to seek breakthroughs in China. Facing mounting pressure from the shift toward new energy vehicles (NEVs), Volkswagen is strengthening its local R&D capabilities, while Toyota has implemented its "Regional Chief Engineer" (RCE) system, empowering its China-based teams to lead vehicle development. Hit hard by electrification, foreign automakers are seeing profit margins squeezed—Toyota reported higher sales volumes in fiscal year 2025 but a decline in net profit, while Volkswagen’s operating profit has dropped to its lowest level in recent years. Against this backdrop, “reverse joint ventures” are gaining traction, accelerating partnerships between overseas automakers and Chinese firms. China’s auto industry now leads globally thanks to three key advantages: the world’s most comprehensive NEV supply chain, the largest market scale, and the ability to define products based on user-driven demand. Chinese automakers have become centerpieces at international auto shows and are taking the lead in setting standards in areas such as solid-state batteries. With growing technological influence, their global impact is poised to expand significantly in the years ahead.