The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, April 27 (Reuters Breakingviews) - The Beijing auto show, which opens to the public on Tuesday, stars some 1500 cars including 181 world premieres at a site roughly the size of 50 soccer pitches. While overseas marques from Toyota to BMW BMWG.DE are vying to compete with Chinese brands like Geely and Nio 9866.HK, the real blockbusters of this year's gathering are the technology suppliers helping both groups to get ahead.

Competition looks set to intensify in the world's largest car market. Although car sales in China fell by a fifth in the first quarter of the year, compared with 2025, automakers appear to be doubling down on the vast domestic market, rather than giving up. In addition to the premieres at the show, over 80 new models launched last month – more than the total number of reveals in the U.S. over an entire year, per analysts at Omdia. Even so, the most impressive exhibitors at the show aren’t automakers at all.

On the eve of the show, Huawei's intelligent car business took over a nearby stadium to celebrate its new assisted driving system, which the company reckons can reduce collisions by 50% compared with its predecessor. It also introduced an in-car voice-activated AI agent dubbed Celia, capable of turning even the vaguest descriptions of potential destinations, such as the restaurant the driver visited last Tuesday, into precise itineraries and routes.

The $301 billion Contemporary Amperex Technology's 300750.SZ stand drew eyeballs with a flying car mounted on a towering podium. Days earlier, the world's largest battery maker which supplies Tesla TSLA.O, Nissan Motors 7201.T and many more showed off a lighter-weight product offering over 1000 km range, another that can charge from 10% capacity to 98% in under seven minutes, and a plan to begin mass-delivering sodium ion batteries later this year.

Battery and car maker BYD 002594.SZ placed a giant freezer at the centre of its stand, which attracted more attention than its flashy new sports cars. Inside, a car dripping with icicles advertised the $127 billion company's new fast-charging system’s ability to power up a battery even in temperatures of minus 30 degrees Celsius.

While carmakers face the prospect of consolidation in China due to brutal price wars and overcapacity, technology suppliers, including vertically integrated carmakers like BYD, look well positioned to capitalise by working with both up and coming local brands, and larger, mature incumbents.

CATL’s revenue and net profit both expanded roughly 50% in the first quarter. Huawei’s auto unit increased sales by over 70% last year and the 7-year-old venture is already profitable. Legacy carmakers are relying on these third parties to try and close the gap with younger, more nimble rivals, with some success. Global manufacturers' share of the market rose to 32% in the first three months of the year from 30% last year - the first uptick since 2020.

Germany's Volkswagen VOWG.DE, the largest overseas automaker by market share in China, unveiled its new electric ID.UNYX 08 including advanced assisted driving, a fast-charging battery with around 700 km range, and even a fridge – the kinds of features local upstarts used to wow at the last Beijing auto show back in 2024. A partnership with local carmaker $16 billion Xpeng 9868.HK played a key role in engineering the underlying electrical architecture for those systems. VW also introduced an in-car AI agent which can carry out tasks such as ordering the driver’s favourite coffee during a morning commute. The company credited $14 billion Horizon Robotics 9660.HK for helping to pull that off. Similarly, BMW cooperated with CATL for its Neue Klasse i3.

Local automakers are also leaning on third parties to keep ahead of international competitors. State-owned JAC’s 600418.SS new Maextro featured a 43-speaker sound system and a smart karaoke function that dubs in the original lyrics when the singer in the car takes a break. All of those features are based on Huawei’s tech.

Indeed, leading tech providers are becoming sought-after brands in their own right. Some carmakers, like Nissan, namedrop CATL in their marketing materials. Others working with Huawei allowed their cars to be displayed in the window at its flagship store in Beijing’s Wangfujing shopping district.

Major suppliers and service providers are eager to keep building on that. Huawei says it will invest 18 billion yuan ($2.6 billion) in smart driving research and development this year alone. While today its systems, software and components have been used in some 50 models, it anticipates that will double to 100 by the end of the year. CATL hiked its research budget by 19% to $3.2 billion in 2025. It will further increase its resources by raising another $5 billion via a share sale in Hong Kong, Reuters reported earlier this month.

Although tech partnerships make it easier for foreign carmakers to compete with Chinese rivals, Volkswagen's China CEO Ralf Brandstätter nonetheless warned that the company does not bet on prices in the People's Republic recovering. Even BYD’s local auto business likely operates at a loss, according to analysts at Citi.

The upshot is carmakers will keep competing at the cutting edge in China while pushing harder into overseas markets, a major theme again at this year's show, which thronged with visitors from not only major auto hubs like Germany and Korea, but also smaller markets such as Uzbekistan and Thailand.

Their partners are following, where they can. CATL is expanding rapidly in Europe, and its Hungary plant is expected to begin production soon. It also broke ground on another factory, which it will run alongside partner Stellantis STLAM.MI, last year. Local regulations make it harder for smart car suppliers to expand at the same speed as automakers have. Huawei's intelligent auto business remains largely focused on the mainland for now.

For those Chinese marques that don't manage to build out business overseas, protecting margins could become trickier as consumers increasingly expect cutting-edge innovation even in mass-market models. The average car in China sells for about 150,000 yuan, about $21,965, and at that level, advanced driving assistance and fast-charging is now the norm, per Omdia analyst Chris Liu.

Some carmakers are trying to ditch third-party suppliers altogether, making a point of developing their own tech to cut costs, hone an edge – or even to become suppliers themselves. Xpeng, for example, is supporting Volkswagen as it expands its range of smart electric cars, some of which now use the Guangzhou-based company's self-developed Turing semiconductors. Nio, which displayed its own chips in glass cases at its booth, is keen to sell to others too.

There was a time when everyone wanted to make cars. The new dream is finding a niche under the bonnet.

Follow Katrina Hamlin on Bluesky and LinkedIn.

CONTEXT NEWS

Auto China 2026 in Beijing opened its doors to media on April 24, and will be open to the public from April 28 to May 3.