IAA Mobility: Chinese automakers are taking the world by storm with electric vehicles

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Chinese electric car makers participated strongly at the IAA Mobility car show this week in Munich, Germany.

About 50 companies – including heavyweights BYD And beginners like Exping -I traveled to the city, according to China State media, about twice as many as the last time the event was held, and the largest Chinese delegation ever International Auto Show. They were the talk of the town.

Even before the start of the show, Renault’s CEO said Luca Di Meo was speaking on French radio about the rapid progress made by Chinese electric car makers.

“They are clearly very competitive in the electric vehicle value chain. I think they are a generation ahead of us He told RTL radio Monday. “We need to catch up very, very quickly.”

Chinese electric cars, which are cheaper than models made elsewhere, are making their way into Europe, Australia and Southeast Asia. Rivals worry that Chinese brands may eventually dominate the global electric vehicle market.

China overtook Japan to become the world’s largest auto exporter in the first quarter of this year, driven by strong demand from Russia and growing global appetite. For electric vehicles, according to job On the website of the Chinese Automobile Association Manufacturers.

In the first eight months of the year, passenger vehicle exports rose 72% to 2.3 million vehicles, a quarter of which were electric, according to 2019 estimates. Data released Friday by the China Passenger Car Association. In August alone, electric vehicle market leader BYD exported more than 25,000 vehicles, followed by Tesla China, which exported 19,465 units.

In Europe, the top destination for Chinese car exports, sales of Chinese electric cars are booming.

Chinese companies exported nearly 350,000 electric vehicles to nine European countries in the first half of the year, more than they exported in all of 2022, according to data from the China Passenger Car Association. In the past five years, EU imports of Chinese cars have quadrupled.

By 2030, Chinese automakers could see their global market share double from 17% to 33%, with European companies suffering the largest loss in market share, according to a recent estimate from UBS.

A handful of Chinese electric car makers are emerging as “new global champions,” auto analysts say.

“Excess capacity, the economic slowdown, and the highly competitive auto market at home are what keep the Chinese… [carmakers] “Look outside for sales,” said Dylan Khoo, an electric vehicle industry analyst at New York-based research firm ABI Research. “In Europe, they see a lucrative market with high demand for electric cars and few protectionist measures.”

Chinese manufacturers pay a 10% import duty to send their vehicles to the EU, compared to the 27.5% required by the United States.

Aside from low taxes, what makes Europe attractive is what makes the European bloc attractive resolution Ban the sale of new cars with internal combustion engines by 2035.

Almost all Chinese automakers plan to focus on major European markets, such as Germany and France, over the next three to five years, according to a new report. Deloitte report published Late last year. Seventy-five percent of the companies surveyed by the consultancy also intend to enter the North American market.

88% of the participants intend to export electric cars mainly.

BYD, China’s largest electric vehicle maker, aims to double the number of its business partners in Europe to 200 this year, BYD spokesman Li Yunfei told reporters in Munich on Tuesday. The company plans to increase its total foreign sales to 250,000 cars in 2023, compared to 55,916 cars in 2022.

For its part, Xpeng launched new models at the exhibition and announced that it will enter the German market in 2024. It also plans to increase the number of its sales and service centers in Europe by the end of this year.

BMW CEO Oliver Zipse said on Sunday that as a result of the upcoming European Union ban on conventional cars and increasing competition from Chinese automakers, European mass-market automakers may exit production of mass-market cars after the ban takes effect. , because of profitability. Fears.

Electric cars, which will become the only option for European manufacturers from 2035, tend to be more expensive to produce than their petrol or diesel counterparts.

According to ABI Research’s Khoo, “Chinese innovators” are offering European customers competitively priced, high-quality electric vehicles across different price segments.

“The European auto supply chain will be disrupted from two directions: these Chinese brands pushing into Europe, and the Western ones [carmakers] He added, “Building production capacity in China for export to Europe.”

Chinese cars are also gaining popularity in other parts of the world.

In the first half of 2023, sales of Chinese cars in Australia, including electric cars, will rise, It has almost doubled from what it was a year ago, reaching more than 16% market share.

The trump card for Chinese electric cars may be the cost advantage.

Chinese cars are about 30% cheaper than their European and American counterparts, according to research firm Jato Dynamics.

The average price of an electric vehicle in China reached 31,829 euros ($34,096) in the first half of 2022, compared to 55,821 euros ($59,797) in Europe and 63,864 euros ($68,429) in the United States, the company said in a statement. a report last year.

“Much of China’s success in driving widespread EV uptake is attributable to the industry’s ability to produce affordable cars for the masses,” the researchers wrote.

They added that consumer perceptions are also changing as Chinese manufacturers are making lower quality cars.

MG, a former British carmaker now controlled by China’s SAIC, posted record sales in the UK in the first quarter of this year. It’s now the second best-selling electric vehicle in the country, according to Company.

In Europe and the United States, many car buyers looking for entry-level models are being priced out of the new car market and are instead looking to buy used cars, delaying their purchases or simply using alternative modes of transportation, they said.

But in China, with widespread demand, strong government incentives and the rapid development of new technologies, electric vehicles are becoming the norm.

“China’s focus has been on ensuring that electric vehicles are available to the masses, and it has been very successful,” the JATO Dynamics researchers said.

By contrast, electric vehicle manufacturers across Europe and the United States, mature car markets with limited government support, have been unable to produce these vehicles “at this pace,” they added.

One of the main factors contributing to the low cost of Chinese electric vehicles is the country’s dominance of the electric vehicle battery supply chain.

According to data from South Korean consulting firm SNE Research, Chinese manufacturers’ share of the global electric vehicle battery market will reach 60% in 2022.

The state also controls the production of battery materials, including nickel, cobalt and lithium.

“China’s competitive advantage in producing lithium-ion battery cells gives automakers an advantage in terms of electric vehicle production costs,” Moody’s analysts said in a report last month.

China is estimated to account for more than half of the global supply of lithium, with this advantage exacerbated by lower labor costs, they added.

However, geopolitical tensions could complicate Chinese EV companies’ global push.

“Increasingly, the United States and Europe are looking to”Eliminate risks“From China, which could create barriers to Chinese imports, even if production costs are lower,” Moody’s analysts said. “This could undo the current acceleration China is seeing in the auto export race.”

Hanna Ziyadi and Olesya Dmitrakova contributed reporting.