developed software that has become an increasingly important differentiator; among the latest examples is the integration of voice-controlled artificial- intelligence systems. The pace of innovation is stunning. “China speed” has become the “drumbeat” of the industry, says Ola Kallenius, boss of Mercedes. The legacy industry’s product-development cycle—roughly 40 to 80 months for new models—now looks painfully slow. Production processes designed around electric vehicles (EVs), combined with deep vertical integration and a greater willingness to improve vehicles after they are released via software updates, mean it takes 24 months at most in China. The technology integrated into foreign cars is often two years or more behind rival Chinese offerings. Incumbent carmakers have begun to overhaul their businesses in response. Designing cars in Europe for the world has “had its day”, says Oliver Blume, boss of VW. The carmaker has started engineering vehicles at a vast new research-and-development (R&D) facility in Hefei, at a pace 30% faster than in Europe. These will be sold not only in China, but also some overseas markets. Mr Kallenius of Mercedes, which has also expanded its R&D presence in China, argues that the speed of innovation there will have to spread around the world. Even Renault, which does not sell cars in China, is now using the country to hasten its innovation: its latest Twingo model, though designed in France and manufactured in Europe, was developed in China to save time and money and glean know-how. To help them catch up in EVs, foreign carmakers have also sought the assistance of Chinese firms. VW, which is launching 20 new models in China this year alone, has allied with XPeng, a local carmaker, and Horizon Robotics, an autonomous-driving startup. Toyota, which will make electric versions of its upmarket Lexus brand at a new factory near Shanghai starting in 2027, is working with Huawei and Tencent, two Chinese tech giants that develop software for cars, as well as Momenta, a rival to Horizon Robotics, and Xiaomi, a gadget-maker with a growing EV business of its own. BMW and Nissan have likewise teamed up with local companies. Rumours of more tie-ups abound. Mercedes reportedly plans to use vehicle architecture from Geely, one of China’s biggest carmakers, to develop small
EVs in the country independently of its European operations. Even American carmakers are starting to buddy up with the Chinese. Ford is said to be talking to Geely about sharing technology and making vehicles in Ford’s European factories. Will efforts to become more Chinese work? Pedro Pacheco of Gartner, another consultancy, warns that China speed is “not a magic formula but a mindset” that will be very hard to match. It is the result of a culture of long hours and an industry that has been built from the start around software- infused EVs. Restructuring legacy carmakers that have relied for decades on petrol power and mechanical engineering will be tough. Mr Blume adds that VW will never be as fast as a Chinese startup because it will never compromise on safety and testing. Get this wrong and the damage to its reputation could be serious. There is nothing wrong with embracing Chinese technology, supply chains and production methods and exporting them globally, reckons Patrick Hummel of UBS, a bank, as long as foreign carmakers are not “pushed to the passenger seat”. But as Tu Le of China Auto Insights, another consultancy, puts it: by relying on technology from Huawei and other Chinese firms for its new cars, what does Toyota now offer? Chevrolet’s attempts to rekindle sales in South America by putting its badge on evs from its joint venture with SAIC, another Chinese carmaker that has a presence of its own on the continent, risks promoting a rival at the expense of the American marque, says Felipe Munoz, an industry analyst. That points to the long-term risks that come with seeking the help of Chinese companies that are increasingly competing with the legacy carmakers abroad. Xpeng is expanding rapidly in Europe and Xiaomi has plans to arrive next year, for example. There is a danger that foreign incumbents are not provided with the latest and best technology by potential rivals whose activities they are now funding through licensing fees. Moreover, relying too heavily on partnerships risks creating a dependency that cannot be broken. Philippe Houchois of Jefferies, another bank, thinks that foreign carmakers may intend to move away from Chinese partnerships in the future. But that could prove difficult unless legacy car companies can transform into successful software-makers, a task at which they have so far
failed. Mr Blume maintains that VW’s goal is to become a “leading tech player worldwide”. But its Cariad software division has struggled. Therein lies the challenge. To avoid falling irrecoverably behind Chinese competitors in EVs, incumbent carmakers may have little choice but to strike partnerships. But in doing so, they run the risk of ceding expertise in the areas that will define the future of the auto industry. That would leave them at the mercy of the rivals they fear the most. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/03/global-carmakers-desperately-want- to-be-more-chinese
Airlines are grappling with dwindling supplies of jet fuel Yet it is unclear where shortages will hit first and hardest May 7th 2026 A commercial jet zooming at 500 knots (575mph) and the stately progress of a tanker cruising at 15 knots yield journey times from the Persian Gulf to Europe measured either in hours or weeks. The difference belies a fundamental connection. The near complete closure of the Strait of Hormuz has prevented both jet fuel and the crude oil from which it is refined from exiting the Gulf, sending prices into a rapid climb. Since the conflict with Iran began, the cost of filling up a plane has thus soared (see chart). That has already claimed one corporate victim. Spirit Airlines, an American low-cost carrier in bankruptcy protection, ceased
operating on May 2nd. Its finances, strained by stiffening competition from big network carriers, buckled under the weight of rising fuel costs. Other airlines have put up ticket prices, added fuel surcharges and cancelled flights that would no longer have been profitable. Among those to have cut flights are Europe’s Lufthansa and Air France-klm; America’s United and Delta; and South-East Asia’s Vietjet and AirAsia. In the second half of April the global volume of flights scheduled for May fell by 13,000, according to Cirium, a data provider. Further down the runway, however, the number of flights is still set to increase by 3-6% in the summer compared with last year, according to Goldman Sachs, a bank. That hardly accords with the availability of jet fuel. Demand averaged around 7.8m barrels per day (b/d) in 2025, according to Société Générale, a bank. Of that, 2m b/d was internationally traded, with 360,000 coming through the Strait of Hormuz. Lack of supply to Asian refineries that rely on Gulf crude to produce jet fuel may create a further shortfall of 800,000 b/d in May, says the bank. Together that adds up to some 15% of total demand. What explains the disconnect between looming shortages and expanding schedules? As Andrew Charlton of Aviation Advocacy, a consultancy,
explains, the last thing to change will be “optimistic messages” from airlines that need to keep selling tickets to maintain cashflow. But it also remains unclear where shortages will hit first and hardest. America, the world’s biggest aviation market, should on the whole remain well supplied. The country is a big oil producer and refiner. Yet it is not entirely immune. Stocks are running down on the West Coast, which is not connected to the web of jet-fuel pipelines between refineries and airports east of the Rocky Mountains. Imports to that side of the country account for nearly a fifth of supplies, with 85% from South Korea, which is now struggling with the loss of crude from the Gulf. The impact on Europe and Asia, which are more exposed than America, is also uneven. Europe burns 1.6m b/d of jet fuel and imports around a third of its needs, three-quarters of which has come from the Gulf. Yet whereas Britain imports around 65% of its requirement, Greece and the Netherlands are net exporters. The outlook in Asia is similarly mixed. China is a large exporter, but curbs on its trade may leave the likes of Australia and Vietnam facing shortages unless they stump up for jet fuel from elsewhere. Stock buffers also differ widely, as Europe’s case shows. The continent in total holds 38 days of commercial stock, climbing to 57 days once government reserves are added. But Britain, which has no strategic reserve, now has a stock of just 29 days of jet fuel, according to Goldman Sachs. For Portugal the figure has fallen to 23 days. That is the level at which the International Energy Agency, an inter-governmental body, reckons that rationing starts to be required. Shifts in trade flows since the start of the war have further complicated matters. High prices have incentivised American refiners to start producing more jet fuel. Seaborne exports from the country have grown by three-fifths, to 280,000 b/d, with 110,000 b/d of that coming to Europe on average in March and April, up from a trickle before. With European airlines prepared to pay more, American exports to Asia have all but ceased. Carriers in the region might get some relief by tapping Indian refiners, which cannot supply European customers owing to the use of sanctioned Russian crude as a feedstock. But India’s government could limit exports.
As the busy summer season approaches, then, it is difficult to tell whose holidays will be spoiled by the jet-fuel shortage. A reopening of the Strait of Hormuz would provide some hope, though it would take time to restore normal trade, especially as infrastructure has been damaged during the conflict. If it remains shut for an extended period, the price of jet fuel would need to increase to levels that would deter significant numbers of passengers from flying. It would be no surprise if a few more carriers follow Spirit to the afterlife. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/07/airlines-are-grappling-with- dwindling-supplies-of-jet-fuel