Trade war and safety concerns take centre stage at Shanghai auto show

SHANGHAI (Reuters) -China's yearly large car shows person go a showcase for the emergence of ever-cheaper, better-performing electrical vehicles and much assured section brands successful the world's biggest marketplace for cars.

But the Shanghai car amusement opened connected Wednesday amid heavy industry-wide uncertainty implicit however the U.S.-China commercialized warfare could dampen request and scramble proviso chains arsenic 100 much models motorboat into an already crowded marketplace with much losers than winners.

In a further complication, Chinese regulators signalled much and tougher scrutiny for smart-driving features that galore automakers had seen arsenic the adjacent large happening successful mounting isolated their cars from competitors conscionable a week ago.

U.S. President Donald Trump's determination to enforce a 145% tariff connected Chinese imports and Beijing's counter-tariffs and commercialized restrictions person pushed planetary maturation forecasts little and forced automakers and their suppliers to face caller risks.

As the Shanghai amusement began connected Wednesday, a conjugation of U.S. car manufacture groups sent a combined missive to Trump urging him to rotation backmost 25% tariffs connected each imported car parts, informing the duties would chopped conveyance income and rise prices.

The archetypal blitz of presentations by automakers successful Shanghai focused connected information and plans for a rapidly expanding portfolio of EVs from brands similar Volkswagen and Nio without treatment of the economical uncertainty.

Car request successful China has held up truthful acold this twelvemonth contempt the commercialized war. Industry-wide car income done March were up 12.5%, led by gains for BYD and Geely, China's 2 apical automakers.

But determination are besides signs of trouble. China is present the world's largest car exporter by volume. While the U.S. marketplace is fundamentally closed owed to tariffs, analysts expect the Trump administration's commercialized policies to enactment unit connected Chinese automakers. That could travel done weaker request successful China if its system wobbles oregon unit from Washington that could unit different U.S. commercialized partners to align their tariffs.

CHINA CRACKS DOWN ON 'SMART DRIVING'

Chinese automakers, which had been preparing to heavy marketplace their driver-assistance features to acceptable their cars isolated from competitors astatine the show, were forced astatine past infinitesimal to power to a "safety first" message.

Regulators past week cracked down connected the usage of selling presumption similar "smart driving" and "autonomous driving" aft a fatal mishap involving Xiaomi's best-selling SU7 EV successful March that triggered concerns implicit however drivers were utilizing systems not designed to beryllium afloat self-driving.

Chinese automakers, led by BYD, had antecedently been pushing precocious and autonomous driving systems, including connected cheaper models, successful a situation to Tesla.

Xpeng, a marque built connected the entreaty of its in-house technology, including an artificial intelligence-powered virtual assistant, said it would motorboat a "training camp" for drivers connected however to usage its systems safely.

“We volition emphasise the capableness boundaries of the driving assistance functions to guarantee safety,” Xpeng CEO He Xiaopeng told reporters connected Wednesday.

Geely said it would implicit a planetary information investigating center, which it described arsenic the world's largest standalone information laboratory, successful the 2nd fractional of this year.

Volkswagen stressed its rigorous German craftsmanship and strict investigating standards.

Lei Jun, the personage CEO of Xiaomi who stole the limelight with a assemblage of cameras pursuing his each determination astatine past year's Beijing show, was absent from Shanghai arsenic the amusement opened.

CHINA SPEED

China's hyper-competitive section marketplace remains a minefield for overseas brands. Sales for Honda and Nissan, for example, were down 34% and 28% respectively successful the archetypal 4th from a twelvemonth earlier.

Volkswagen, erstwhile China’s top-selling rider car brand, saw income driblet 6% successful the archetypal quarter. Under an physics banner with the motto “CHINA SPEED,” the German automaker connected Wednesday unveiled the archetypal of 5 caller models, including for its premium Audi brand.

More than 70 Chinese and planetary car brands volition amusement disconnected much than 100 caller oregon refreshed models this week.

Less than 10% of the much than 160 car brands competing successful China person a marketplace stock higher than 2%, according to information from Jato Dynamics. Most inactive suffer money. Among the winners: BYD, Chery and Geely are profitable, on with EV-focused Leapmotor and Li Auto.

Tesla, the lone overseas automaker with a top-selling EV successful China, said connected Tuesday that it would person to reassess its maturation forecast successful 3 months due to the fact that of the trouble successful predicting “the impacts of shifting planetary commercialized argumentation connected the automotive and vigor proviso chains."

The commercialized warfare has already deed Tesla. Its China income were down 22% done March from a twelvemonth earlier. The institution has suspended orders for the Model S and Model X due to the fact that of China’s counter-tariffs and paused immoderate imports of China-sourced components.

Tesla CEO Elon Musk said connected Tuesday portion announcing a 71% plunge successful first-quarter nett net that the EV maker's already-delayed accumulation plans for its Optimus humanoid robot had been slowed by China’s restrictions connected the export of the uncommon world magnets needed for the centrifugal powering the robot’s arms.

Musk had earlier predicted the robot would beryllium moving successful Tesla factories this year.

(Reporting by Zhang Yan, Qiaoyi Li, Victoria Waldersee, Nick Carey, Casey Hall, Zhuzhu Cui, Brian Thevenot and Brenda Goh; Writing by Kevin Krolicki; Editing by Jamie Freed)