Electric cars from China are filling European streets

Chinese electric vehicles are making their way into European markets at large. Xpeng announced its first deliveries to Norway in October 2020. Around the same time, John Voelcker, a seasoned auto reviewer, drove the company’s P7 electric sedan, and pronounced it pretty darn good—it had “perhaps 75 percent of the features and capability of a Tesla,” and at the time, carried about 50 percent of the price tag. (That may no longer be the case, thanks to Tesla’s recent price cuts, but the Chinese brands’ prices are still tempting.)

Above: Tesla competitor Xpeng Motors' future delivery center in Europe. (Image: Xpeng Motors)

Two years later, Chinese EVs from Xpeng, BYD and MG are common sights on the streets of Oslo (to say nothing of models from Volvo and Polestar, both owned by Chinese firm Geely).

As every China-watcher knows, the country’s strong push into electrification is not just about cleaning up choking air pollution—it’s also about muscling into the global auto industry. China has been building decent cars for many years, but most buyers, including Chinese ones, seem to prefer more prestigious brands such as Mercedes and BMW (and, for obscure reasons, Buick). However, as they watched Western automakers being dragged kicking and screaming into the electric era, Chinese industrialists saw an opportunity, and they seized it.

A Chinese car may never have the pizzaz of a Porsche or the trendiness of a Tesla, but there are a few billion buyers down there in the budget segments, which Western EV-makers are still mostly ignoring. Lunch is on the table, and who will eat it?

One of those sounding the alarm is Stellantis CEO Carlos Tavares, who spoke with Automobilwoche at CES 2023 in Las Vegas. “The price difference between European and Chinese vehicles is significant,” he said. “If nothing is changed in the current situation, European customers from the middle class will increasingly turn to Chinese models.”

Tavares apparently sees the EU’s emissions regulations as part of the problem. “Regulation in Europe ensures that electric cars built in Europe are about 40 percent more expensive than comparable vehicles made in China,” he said, adding that the region’s auto industry could suffer the same bleak fate as the European solar panel industry.

Tavares sees two ways forward: protectionism, which wouldn’t be popular with German automakers, who do a lot of business in China; or a pitched battle. “If you keep the European market open, then we have no choice: we have to fight the Chinese directly. And that applies to the entire automotive value chain.”

However, “that would inevitably lead to unpopular decisions,” by which he surely means job cuts and the relocation of factories to lower-cost regions. “If nothing is done in the European Union, there will be a terrible fight,” he said.

Now, Mr. Tavares used to be an EV skeptic, and he has a history of making thinly-veiled appeals for government subsidies. But that doesn’t make his words untrue. We can argue about whether the EU and national governments are doing enough to support the transition, but there’s no question that automakers need to start offering more low-priced EVs (and not only in Europe—the Chinese also have the US market in their sights).

“We don’t know how to make small cars with affordable batteries, and China knows it,” said Patrick Koller, CEO of French supplier Forvia, at a CES press conference. High battery costs are part of the problem—small urban EVs can cost about 10,000 euros ($10,600) more in Europe than in China, Koller pointed out, adding that rapid innovation “is a must.”

Not all the barbarians at European automakers’ gates come from China—looking at Model Y sales figures in Europe, one could argue that Tesla is more of a threat to the European OEMs than all the Chinese brands put together. On the other hand, when it comes to low-priced city cars, Tesla is a slower-moving threat. Fortunately, the winning strategy to meet both of these threats is the same: automakers need to call all hands on deck, and start producing more compelling budget-priced EVs tout de suite.

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Source: Automotive News Europe