China has by far the largest electric car market in the world – nowhere else are so many battery-powered vehicles sold as in China. Chinese electric car manufacturers such as BYD, NIO or Xpeng are enjoying enormous growth rates and now want to expand in Europe – but that doesn’t seem to be an easy task.
• Chinese electric car-Brands in Europe so far hardly known
• BYD, NIO & Co. start expansion in European market
• Europeans have reservations about Chinese cars because of alleged quality defects
The largest Chinese electric car manufacturers, which include BYD, NIO, Xpeng, Geely and Li Auto, have seen rapid growth in sales in recent years. In Europe, however, the names of Chinese EV manufacturers are hardly known. According to a YouGov survey, in 2022 only 17 percent of German consumers knew NIO, 14 percent BYD, ten percent Geely and only eight percent Xpeng. For comparison: According to the survey, a full 95 percent of the Germans surveyed could do something with the name Tesla. If the Chinese electric car manufacturers have their way, the relative obscurity of their brands should be overcome as quickly as possible.
BYD, NIO & Co. make a promising market launch in Europe
Although Chinese electric cars are still a long way from being a mass phenomenon on European roads, BYD, NIO & Co. have nevertheless recorded initial successes in recent years. Eight percent of all EV vehicles sold in Europe so far this year were of Chinese origin, as Reuters reports, citing a study by the consulting firm Inovev. This represents a significant increase compared to previous years: in 2022, the share of Chinese cars in the total market volume was six percent, in 2021 still four percent. Further growth is likely to be inevitable; by 2025, eleven new Chinese electric car models are to come onto the European market. The enormous growth of the Chinese car brands in Europe – although overall sales are still at a relatively low level – did not go unnoticed by the European top dogs. For example, Carlos Tavares, head of the Dutch car group Stellantis, which includes well-known car brands such as Opel, Peugeot, Citroën and Fiat, warned last month of an “invasion” of cheap Chinese electric cars in Europe, according to Reuters.
Europeans’ reservations about Chinese cars
However, a number of obstacles need to be cleared for Chinese EV brands to triumph in Europe. First and foremost, European drivers have reservations about cars that come from China. Even those Europeans who are even aware of Chinese brands are often reluctant to buy Chinese cars because of the widespread stereotype of allegedly poor quality. The reluctance of European consumers is reminiscent of the decades-long struggle of Japanese and South Korean automakers such as Toyota, Mazda, Hyundai, or Kia to gain trust and adapt to European tastes.
To allay European customers’ doubts, Chinese automakers claim to have received five-star ratings under European safety standards, going well beyond legal requirements. Many manufacturers aim to gain consumer confidence through test drives and showrooms where European buyers can judge the quality of their EVs first-hand. “When they come into contact with the product, the quality and specifications are much higher than a comparable European product they are used to. This will surprise them,” emphasizes Spiros Fotinos, head of the European business of the Chinese EV Manufacturer Zeekr. Also, Chinese state-owned automaker GAC, the third-biggest seller of electric cars in China, recently opened a design office in Milan to get a feel for consumer preferences before starting sales.
Therefore, Chinese electric cars are likely to be more expensive in Europe than in China
In addition to the shallow factors such as the psychological reservations of European customers towards Chinese cars, there are also hard economic factors that make expansion difficult. So the real main advantage of Chinese cars, offering reasonable quality for a low price, might be limited in Europe. Researchers from Jato Dynamics report that the average price of an electric vehicle (EV) in China was under €32,000 ($35,000) in the first half of 2022, while the corresponding average in Europe was around €56,000.
However, Chinese car brands are likely to face numerous challenges when attempting to sell vehicles in Europe at the same low cost that can be achieved domestically. Logistics, sales tax, import duties and the need to meet European certification standards all add to the costs, Fotinos, the European CEO of Chinese brand Zeekr, which belongs to Geely, told Reuters. MG, the most successful Chinese-made brand in Europe, cited navigating crowded ports with long waits to move vehicles from China to European distribution centers as the main obstacle. Accounting for Europe’s propensity for larger batteries suitable for longer journeys could also contribute to higher spending, noted Alexander Klose, the international head of Chinese electric vehicle startup Aiways. As a result, there is still a long way to go before Chinese electric car manufacturers have fully established themselves on the European market.
Editorial office finanzen.net
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