Foreign carmakers in China face 'increasingly precarious' position, consultancy says

BEIJING — New tariffs on Chinese electric cars aren't enough to help foreign automakers stay competitive, especially in the lucrative China market, according to consulting firm AlixPartners.

China is the world's largest auto market. It's taken the global lead in the development of new energy vehicles, which include battery-only and hybrid-powered cars.

The NEV category now accounts for more than 40% of new passenger cars sold in China — and domestic automakers are mostly leading sales, with foreign companies lagging behind.

A lot of foreign car companies still haven't figured out how their products can stand out in China's EV market, Stephen Dyer, co-leader and head of AlixPartners' Asia automotive practice, said during an annual industry outlook event on Wednesday.

"Unless [foreign car brands] change their mindset of developing and manufacturing cars to one that is more willing to take risks, and consider how to design and manufacture a car from so-called first principles, their position will become increasingly precarious," Dyer said in Mandarin, translated by CNBC. He was referring to a concept that refers to problem-solving based on fundamental aspects of the issue.

German luxury brand Porsche said last Tuesday that China sales plunged by one-third in the first-half of the year. The company blamed consumers' "focus on value oriented sales."

Chinese automakers from Nio to BYD have already started to export cars to Europe and other overseas markets, prompting the U.S. to raise tariffs on the vehicles from 25% to 100%.

The EUalso announced in June it would impose tariffs of up to 38% on Chinese EV imports to combat the "threat of economic injury" to European EV makers. In response, China has said it's in talks to "reach a