Europe automakers begin EV counter-offensive
At the Munich Auto Show, Europe’s automakers launched their counter-offensive against the invasion of their market by Chinese manufacturers of electric vehicles.
The show was held from September 9 to 14 and attracted 500,000 visitors. A record 116 exhibitors from China showed their vehicles, with new EV models from BYD, Xpeng and Leapmotor. This number was second only to that from the host country, Germany.
Aware of their weakness in the sector, Volkswagen and BMW both launched new models at the event. BMW showed its iX3 sports utility EV, powered by “superbrain” software.
It is the first of 40 new model and model updates to be rolled out during the next two years on BMW’s long-awaited Neue Klasse platform. “With the Neue Klasse, we are making great strides in all relevant technology fields,” said BMW chief executive Oliver Zipse.
“The new BMWiX3 will be the benchmark in our industry,” he said. The company has radically changed the way it has designed and built cars. A centralised computer system has replaced hardware as the most important feature. “But the technology race in our industry will be decided in China,” he said.
BMW started work on the Neue Klasse platform in 2021 and has spent more than 10 billion euros on developing the technology. It will deliver more than 20 times the computing power of current vehicles and greatly reduce the complexity of a car’s electronics.
In the first half of this year, EVs and battery-power vehicles accounted for 18 per cent of BMW’s global sales, compared to 11 per cent for VW and eight per cent for Mercedes Benz.
At the Munich show, VW unveiled its new compact electric SUV. It will have its world premiere in the summer of 2026 and is expected to be priced between 28,000 euros and 30,000 euros, targeting less affluent clients who want to buy EVs.
German automakers are fighting hard to catch up with their Chinese competitors which can produce EVs at substantially lower cost. To protect Europe’s manufacturers, last October the European Commission imposed a tariff of 45 per cent on imports of Chinese EVs, saying that they unfairly received state subsidies.
As from 2035, petrol and diesel vehicles will be banned from the roads of the EU.
This market has become the most important export market for Chinese EV makers. They are virtually banned from the U.S. market, where they face a 100 per cent tariff. At home, massive overcapacity and price-cutting have sharply reduced their profits.
At Munich, BYD unveiled its first estate car, Leapmotor the B05 hatchback and Xpeng its P7 sedan. In July this year, Chinese brands accounted for nearly 10 per cent of EV sales in Europe and more than five per cent of all auto sales. So, for the European makers, the challenge of EVs is an existential threat.
In their favour is their strong brand recognition, customer loyalty and wide dealer network. Most Europeans are not familiar with Chinese brands and need to be convinced of their quality.
To avoid the tariffs, the Chinese companies are investing in production in Europe.
On September 15, Xpeng announced that it had started assembling the G6 and G9 SUVs at the factory of Magna Steyr in Graz, Austria. It said that it will assemble more models in the plant.
BMW has a production plant in Hungary, as well as in Turkey. Chery Automobile owns a factory in Spain. At the Munich Show, BMW said that it would double the number of its showrooms in Europe to 2,000 in 2026 and make all of its EVs sold to Europe within the EU by 2028.
David Zhang, secretary-general of the International Intelligent Vehicle Engineering Association, said that more Chinese automakers and automotive supply-chain vendors would set up production facilities in Europe to compete in the market, banking on their EV technologies. “They need to gain bigger market shares abroad to improve profitability,” he said.
All this is good news for European workers and the governments who will receive tax revenue from the new plants. But it is not good news for the European automakers who will face competition from models made within the EU as well as from China.
The Munich show marked the start of this existential fight.
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