China electric vehicle makers target European market

Mark O'Neill August 02, 2021 10:19

China’s manufacturers of electric vehicles (EVs) are targeting Europe as their top foreign market and aim for sales of 500,000 units by 2025.

In the “China in 2025” masterplan to develop the economy, EVs is one 10 strategic sectors. Beijing has given up hope of becoming a global leader in petrol-driven cars and instead is investing heavily in the vehicles of the future.

The Chinese makers have selected Europe because it has set the most ambitious targets for the environment. It has a target to become a climate-neutral continent by 2050. The European Commission wants at least 30 million EVs on the roads by 2030, compared to 1.4 million now.

The Covid recovery stimulus package of the EU, of 750 billion euros, includes 20 billion to increase sales of clean vehicles and installation of one million electric and hydrogen-charging stations by 2025.

The EU is second to China in production of EVs between 2010 and 2020, according to a study by the International Council on Clean Technology. In the period, Europe produced 2.6 million EVs, 25 per cent of global production, and sold 3.2 million, making it a net importer.

In the same period, China produced and sold 4.6 million EVs, 44 per cent of global output.

Seeing this great potential, Chinese makers such as Aiways, Lynk & Co, MG and Seres have set up operations in Europe. According to French consultant HIS Markit, there will be 13 Chinese EVs in the market by the end of the year.

Their biggest competitor in Europe will be Volkswagen, which has several all-EV assembly plants in Europe and China. It is expected to be the world’s number one producer of them by 2025, based on plans and investments it has announced. VW has said that, by 2030, at least 70 per cent of the cars in Europe will be electric.

In 2020, almost 400,000 EVs were sold in Germany, an increase of 250 per cent over 2019. It has become the world’s second largest global market for EVs, behind China. They account for 13 per cent of the overall European market, a figure that will rise with state subsidies.

In the first 11 months of 2020, China exported 63,500 pure battery-power EVs, official figures show. Egypt and Saudi Arabia were the two biggest destinations; the largest markets in Europe were Britain, Belgium and Germany.

In December, Chinese maker Xpeng, which is listed in the United States, delivered 100 G3 electric SUVs to Norway. The firm plans to set up a subsidiary in northern Europe in the second half of this year, before looking at western and eastern Europe.

In the first three months of this year, Aiways, another Chinese EV maker, exported more than 1,000 vehicles to Europe and Israel.

Analysts in Europe say that, previously, Chinese autos in Europe suffered from a reputation of being cheap and of poor quality, which accounted for their negligible market share.

But, with the arrival of Huawei and Xiaomi and then EVs, this has changed. China is a world leader in this technology. The EV makers have hired leading designers and engineers and worked with Baidu, Alibaba, Tencent and Xiaomi to provide state-of-the-art software and electronics.

Aurelien Venet, director of communications for Aiways in France, said that its models were 10,000 euros cheaper than those of its competitors.

It is saving money by not establishing a traditional network of distribution centres but making all its sales over the Internet.

“We have two prices, 39,366 euros for the standard version and 42,400 euros for the premium,” he said. “The client can choose between three colours for the exterior and two for the interior. He can make his choice on our site in a matter of minutes.”

Lynk & Co is offering a monthly payment of 500 euros to cover parking, insurance and maintenance. The client can cancel this payment at any time.

In May, Chinese EV maker Nio announced that it planned to begin deliveries in Norway in September, the company’s first outside China.
It plans to first launch its ES8 SUV to the new market this year, followed by its ET7 sedan in 2022. The company anticipates expanding its local staff of 15 people to 50 by the end of the year.

The Norway venture will begin with a flagship “Nio House” store in Oslo, due to open in the third quarter. It plans to open four smaller showrooms in other parts of Norway next year. The Norwegian Road Federations said that more than half the new cars sold in Norway last year were battery-powered EV, or 54.3 per cent, compared to 42% in 2019.

These mark the opening salvoes in China’s battle for the European market. It will become increasingly intense over the next five years.

-- Contact us at [email protected]

Mark O'Neill

A Hong Kong-based writer, teacher and speaker.