William Li CEO of Nio: "We will make profits faster than Tesla"
Three BYD models, another Chinese electric giant that lands in Europe
Test MG 4: an example of why there are those who fear the Chinese
«The European market is completely open to Chinese manufacturers and
we do not know if their strategy is to gain market share by selling at a loss and once consolidated, raise prices.
Their offense was predictable, and with competitive prices, but a red carpet has been laid out for them,” Carlos Tavares, CEO of Stellantis, stated at the end of October.
And he asked that the EU increase the tariffs on its cars (from 10% to 25%) until it equals that paid by Western cars that go to that market.
Also in Paris, Luca de Meo, CEO of the Renault Group, then downplayed the matter: «The Japanese came, then the Koreans and now the Chinese.
It's called competition,"
He said.
This year, also as president of the Acea employers' association, he said that he had to correct the "asymmetric arrival" of Chinese cars to the EU,
in the sense of achieving "equitable conditions" for access to both the Chinese and US markets.
The MG Marvel R is a 100% electric model
Still a minority, but very strong
But does the European industry have to be so concerned about this already definitive landing?
The number of Chinese banners that are sold is vast.
In the Spanish case: Aiways, DFSK (with its more luxurious division Seres), Maxus, JAC, MG and SWM, to which Polestar and Lynk & Co could be added, both from Geely, which also has 50% of Smart.
And Nio (very exclusive and focused on luxury), Great Wall Motors (with three brands) and BYD have already been announced.
In 2022, only the latter sold 1.87 million units, only 56,000 outside the country.
For now, their records are in the minority, but with very strong progressions.
In Spain, in two years MG is already selling almost 7,000 cars.
And it is largely responsible for the Chinese tripling their volume in the EU in 2022, up to 152,400 cars, according to Jato Dynamics.
Wey is one of three Great Wall Motors brands for Europe
World's largest exporter
PwC forecasts that, by 2025, they will be around 500,000 units, 800,000 if vehicles made in China by Western brands are added.
And the next step already declared, as the Japanese or Koreans did before, will be to set up their own factories in Europe.
In Spain, Chery and Great Wall Motors have shown interest in the Nissan plants in Barcelona;
and BYD has been one of many interested in Ford's in Saarlouis.
In addition, Citic Securities calculates that by 2030 they will be exporting 5.5 million cars worldwide
, adding another lead to production and sales
(23.6 million passenger cars in 2022, more than Europe and the US combined).
China also makes western cars, like this Volvo
Reasons for the delay
In fact, the strength of its internal market, with 1,400 million inhabitants, is one of the reasons that its departure has been delayed, until now focused on Africa, South America and Asia.
That is, less rigorous markets in terms of quality, safety or emissions.
Not to mention the entry barrier that combustion engine technology posed for them, despite the joint ventures
that they have had for decades with Western manufacturers that produce in China.
But they have already solved these deficiencies and, in addition, they have made a virtue of necessity.
«At the beginning of this century, the authorities saw that they could not compete with traditional engines and decided to bet on electrification.
Today we have a 10-year advantage in this field”,
points out Julián Alonso, president of the Invicta Group, with which he sells the DFSK and SWM brands and is about to close a third.
As an example of this, PwC points out that 73% of all battery-powered cars sold in the world were in China.
William Li, CEO of Nio
Control of technology and processes
It is about better control of technology and its costs, a predominance that also extends to batteries, from access to components to assembly,
going through key processes such as refining and battery chemistry;
or the production of anodes and cathodes.
This fact,
and it is one of the great laments of Western manufacturers,
has not been taken into account by EU politicians,
determined to make the region the first in the world to be electrified, banning the sale of motor cars since 2035. combustion, including hybrids.
And subsidizing, wherever they come from, those with zero emissions.
But while continuing to press the side of traditional cars with a Euro7 emission standard that Chinese brands will prefer to renounce.
state owned
At this point, a criticism of its structure also slips,
since the vast majority of them (BYD is not the case) are owned by the State (municipalities included) and this would open the door to the injection of public funds
(more or less opaque ) that compensate losses, while in the EU all this type of aid is looked at with a magnifying glass.
"There is a lot of talk here about PERTE VEC and no one questions it, on the contrary, it is applauded," says José Antonio Galve, head of product and PR for MG Spain and Portugal.
“The Chinese are not doing anything that the Japanese or the Koreans didn't do before.
Take advantage of the benefits achieved in the local market to finance their exit abroad»,
says Julián Alonso.
Only, according to the local press itself, only BYD would be profitable in the huge swarm of local builders.
new vs traditional brands
“More than a war between China and the West, we see a fight between new and traditional brands. And in Spain, 50% of those who change their car also change their brand”,
argues Galve, who alludes as part of his success to the fact that they are advancing the money from Moves to customers.
But he also defends, like Alonso, that, although luxurious models such as the Seres 5 that will be close to 70,000 euros or those of Nio come, one of the strengths of Chinese cars is that they are more reliable and cheaper because they have less electronics.
Or the leap forward in its interiors "that have surprised some of the large Spanish providers" adds the second of them, although, curiously, they are still behind (at least the normal models) in connectivity and multimedia.
The development of a strong dealer network, which helps to publicize the product and the brand and reassures the customer with good after-sales service, seems to be another key element.
MG
, for example, already has 55 points of sale in Spain.
THE FIGURES OF THE CHINESE ARRIVAL
drop down
152,400 / CARS SOLD BY CHINESE BRANDS.
According to the consultancy Jato Dynamics, the demand for these vehicles multiplied by 2.5 compared to 2021, but they barely represented a share of 1.4% and three out of four were provided by a single brand: MG.
800,000 /EXPORTS TO EUROPE.
Cars made in China that will be sold in Europe by 2025, according to the consultancy PwC.
Of that number, some 300,000 would be Western brands that produce there.
In addition, the consultancy predicts that, five years later, up to 7.9% of all electric vehicles marketed in the Old Continent will have that nationality.
5.5 MILLION.
Volume of cars that China could be exporting to the rest of the world in 2030. This would allow it to surpass Japan by far and add another world leadership to those it already holds in terms of production and sales since 2009.
10 YEARS.
According to Luca de Meo, CEO of Renault and president of the Acea employers' association, this is the advantage that Asian manufacturers have in electrical technology.
And that means that they will be able to offer affordable battery-powered models sooner.
EURO 7.
This new emission standard for cars in the EU is expected to come into force in 2026.
The local industry has warned that its demands will make vehicles more expensive (even more) and will force to divert millionaire investments that could go to electrification.
It's like shooting yourself in the foot, they come to say, contrary to what they do in China or the US in defense of their automobile industry.
BYD.
It is the fourth largest automobile company in the world by market capitalization, with 104,000 million dollars.
Only Tesla, Toyota and Porsche surpass it.
It has 288,000 employees.
CATL.
The Chinese company is the world leader in the production of electric batteries, with 32.6% of the total.
The Korean LG (20.3%) was second.
No European company appears in the Top 10.
OUTSTANDING IN SAFETY
Not many years ago, if a Chinese brand aspired to sell its cars in Europe, it was enough to submit one of its vehicles to crash tests such as those carried out by the independent organization EuroNCAP.
The result was so disastrous that the adventure died right there or was reduced to a minimum.
Currently, most of the brands from that country that have set foot on Europe have not only passed this subject, but have done so with distinction.
This is what happened in 2022, with five manufacturers from that country appearing for the first time in the tests: BYD, Maxus, Chery, Ora and Wey.
All its models achieved the maximum rating of five stars and those of the last two brands were also the best in their respective categories.
The #1 Smart model also achieved the maximum score,
THE LAW AGAINST INFLATION IN THE USA
Last August, the Joe Biden Administration carried out the so-called Inflation Reduction Act, known as the IRA law for its acronym in English.
It contemplates 369,000 million dollars in subsidies to invest in 'green' activities which, in the automotive field, translates into aid of 7,500 dollars for the acquisition of a 100% electric vehicle.
The problem is that it requires that it be manufactured in the US and, as of 2024, it will also require that 40% of the battery materials or half of the components must be locally produced, a percentage that will rise to 100% in 2029. The European Union,
According to the criteria of The Trust Project
Know more
motor industry
Electric cars