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Chinese carmakers and their vast network of auto-parts suppliers need to become more competitive in order to fend off increasing competition from Tesla Inc. and foreign battery and chip manufacturers, an industry group said.

Although Asia’s biggest economy is home to the world’s biggest automobile market, it doesn’t have a competitive supply chain and not one local auto-parts maker is ranked among the top 500 companies globally, Cui Dongshu, secretary general of the China Passenger Car Association, told an electric-vehicle battery forum in Ningxiang this week.

Tesla has triumphed over domestic players like NIO Inc. and Li Auto Inc. when it comes to controlling costs and lowering the price of electric cars quickly to spur consumer demand, Cui said.

(Also read | Chinese firm BAIC's electric vehicle unit bets on luxury model for comeback)

Cui’s admonition comes as EV sales in Europe jump as governments there stoke sales via incentives and subsidies. The China Association of Automobile Manufacturers said last week that many of the home-grown companies that supply car parts to conventional automakers risk being pushed out of business as the industry transitions to electric vehicles.

“Owning core technology is the key for Chinese companies," said Yuan Chengyin, general manager of the National New Energy Vehicle Technology Innovation Center in Beijing. “Chinese companies will only be able to break bottlenecks if they come up with better offerings."

(Also read | China's 2020 auto production and sales could return to 2019 levels)

A cobalt-free battery is one of the technologies that battery makers have been exploring. Cobalt is expensive because about half of the world’s supply comes from the Democratic Republic of Congo, where long-standing corruption and governance issues are compounded by the use of child labor in mining and high taxes on the metal.

Svolt Energy Technology Co., based in Changzhou in China’s eastern Jiangsu province, is developing a cobalt-free battery that will be used in Great Wall Motor Co.’s new models. The cars will have a driving range of as far as 800 kilometers, according to Svolt.

This story has been published from a wire agency feed without modifications to the text.

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