Chinese electric cars: an emerging force in Europe
Within the European car industry, the rise of Chinese manufacturers is viewed with suspicion. Almost 8 per cent of new electric cars sold in Europe are now Chinese brands. And that is just the beginning, analysts expect.
China’s electric car revolution
In the age of the electric car, we see a notable shift in the global auto industry, with China being a major player. While China was not previously known for its impressive car industry, it has now seized its opportunity. The surge in prosperity has led to a greater number of car owners in China. Some 25 million Chinese have been obtaining their driving licences every year since 2014, and the total number of cars in the country has reached the 320 million mark.
Many of these new cars are electric, with more than 20 per cent of all cars sold running on electricity. To compare: In Europe, it is about 12%, while in the United States it is only 7%. With almost 60% of global electric vehicle sales, China is currently the world’s largest market. This development could significantly affect the European car industry.
Chinese brands enter Europe
China is not only entering the EV market at home, but also across borders. Chinese carmakers such as Aiways and NIO are coming to Europe and forming partnerships with established carmakers. For instance, electric car brand Polestar comes from Volvo, which is owned by China’s Geely. Moreover, Smart’s electric models are produced in China, and the originally British MG is also now Chinese-owned and focused entirely on producing electric cars.
The market share of Chinese carbrands in Western Europe is growing steadily. This year, Chinese car brands account for 7.9 per cent of all new electric passenger cars sold. With this, China already produces more electric cars than the two other major Asian car countries, South Korea and Japan, combined.
What does this mean for Europe?
Should the European car industry be worried about this new Chinese competition? Analysts expect Chinese manufacturers to eventually produce their cars in Europe, probably from 2025 when the stricter European environmental standard Euro 7 comes into force. As a result, the cost of producing smaller petrol and diesel cars will rise, which is a good time for the introduction of cheap small electric cars to the European market.
Opinions within Europe on the Chinese advance are divided. German automakers, for example, sell many cars in China and are cautious about trade barriers. However, Chinese brands have a competitive advantage due to lower labour costs and a well-designed supply chain for EVs. This means Chinese electric cars can be marketed more cheaply, which could benefit the average consumer in Europe.
Summary
The rise of Chinese electric cars is a trend the European car industry is watching closely. Although it will be some time before Chinese EVs are dominant in Europe, this development could reshuffle the cards in the industry. Lower prices for electric cars and greater consumer choice could have positive effects. However, it remains to be seen how the European car industry will react to this growing Chinese competition.
