Report: EU Automakers Scrambling To Counter Chinese EVs

European automakers are growing increasingly concerned about the threat posed by low-cost Chinese electric vehicles (EVs), yet they remain hopeful about defending their market share, reports Automotive News Europe. 

The sales of Chinese-made vehicles, primed with both all-electric (EV) and internal combustion engines (ICE), have surged recently, with notable contributions from China-based automakers like MG and BYD, as well as Chinese-made imports from Tesla, Dacia, and BMW.

According to a study by the Rhodium Group, about 300,000 Chinese-made EVs were sold in Europe last year, doubling the 150,000 units sold in 2021. This increase has prompted the European Commission (EC) to investigate Beijing’s support for its domestic EV industry, with potential tariffs possibly rising to 30% from the current 10%.

EC Ursula von der Leyen previously warned of a “flood” of cheap EVs bolstered by Chinese state subsidies.  For instance, BYD plans to sell its Seagull compact EV in Europe next year for under €20,000, though it sells for about €10,000 in China, thus allowing significant room for price adjustments in a competitive market. Even BYD recently surpassed Tesla as the world's largest EV maker.

As automakers await the Commission’s decision, they are strategising to match the Chinese in technology, if not price.  Andreas-Christoph Hofmann, Chief Marketing Officer of Hyundai Europe, mentioned that Hyundai is internally discussing how to address the increasing competition from China and what measures can be taken to defend its market position.  He emphasised the importance of leveraging Hyundai’s unique selling points (USPs) and strengths.

Volkswagen Group, on the other hand, is calling for European authorities to establish a regulatory framework to support the survival of German and other domestic automakers.  Thomas Schmall, VW Group board member responsible for technology, stressed the urgency, noting that the industry has a narrow window of two to three years to act. He also pointed out that speed, rather than size, is now the key differentiating factor in the competition.

In response to the rising Chinese competition and other industry changes such as electrification and digitalisation, partnerships are emerging as a crucial strategy. 

Stellantis, for example, has partnered with China’s Leapmotor to sell and potentially produce Chinese-developed EVs in Europe. Schmall also highlighted the importance of collaborations, likening it to a dance where “it takes two to tango,” and noted that the pace of change would be fast, with fewer players remaining in the market.

European automakers face additional challenges beyond Chinese competition, including stringent European regulations that have driven up car prices over the past two decades. Renault Italy CEO Raffaele Fusilli outlined plans to reduce production costs by 40 percent and cut production time by one-third by 2027, all while aiming for long-term profitability. 

Fusilli also emphasised the need to balance sustainability and profitability, potentially through smaller, more efficient batteries. Despite the increasing competition from China, Fusilli remains optimistic about the future. He believes European carmakers will bridge the gap, though not immediately. “It is going to happen, even if not quickly. And we will win,” he stated. KR