Nio, geely, BYD competition for daimler, VW and BMW: Chinese electric carmakers are pushing into europe
chinese carmaker geely wants to conquer the european market with the polestar 2 electric car.
dusseldorf the days are over when the export hopes of chinese automakers such as landwind and brilliance were crushed in crash tests. Instead, the new electric car producers from the People’s Republic are securing top marks, such as most recently for the Polestar 2 electric model. The sedan, manufactured by joint venture partners volvo and geely, performed even better in the ADAC test than the e-volkswagen ID4.
this new reliability is part of the chinese government’s plan to make the country a leading exporter of electric vehicles. This is the conclusion of a new study by merics, a think tank specializing in china, which has been made available to handelsblatt in advance.
"europe is the most important market for chinese e-car exporters," says study author Gregor Sebastian. the fact that manufacturers such as polestar and great wall motors will be exhibiting at the international motor show (IAA) in munich next week also clearly shows their ambitions in the german market.
Already, every second electric car worldwide comes from china. According to data from the Chinese Automobile Association (CAAM), one million electric models rolled off the production line in the first half of the year, twice as many as in the previous year. A new record. By 2028, the number is expected to rise to eight million e-vehicles per year, estimates data provider LMC automotive.
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So far, however, most vehicles are sold in china itself. With around one million e-cars sold in the first half of the year, the country is the world’s largest market. Due to the high growth rates in recent years, local carmakers have focused on the domestic market. However, growth is slowing, partly because the government is continuing to cut the previously very high purchase premiums for electric vehicles.
The consolidation of the market is likely to be survived only by those of the 90 or so local e-car manufacturers that reach a certain size and thus achieve economies of scale, says expert sebastian. He considers the manufacturers BYD, geely, nio, SAIC and xpeng to be particularly promising. Some of these are likely to "catch on in europe as well," he believes.
Germany "highly interesting" for Chinese carmakers
As the world’s second-largest and fast-growing e-car sales market, europe is particularly promising for china’s manufacturers. For market entry, they mostly choose norway because the charging infrastructure is best developed there. But recently, nine percent of chinese e-car exports already went to germany.
"norway is just the beginning," said william li, head of chinese e-car newcomer nio, in a recent interview with the frankfurter allgemeine sonntagszeitung. The company is making intensive preparations for its entry into europe, "and germany is very interesting for us," he said. The vehicles should also be available here by the end of 2022 at the latest.
The polestar 2 e-model has been available in germany since mid-2020. The sedan was initially marketed exclusively via the internet. Meanwhile, the joint venture between geely and volvo has opened showrooms in major cities such as hamburg and munich. The brand is also presenting itself at the IAA.
Great Wall Motors will also be represented at the IAA with its e-car brands ora in the low-cost segment and wey in the luxury class. Starting in the fall, it will be possible to pre-order an SUV from the wey brand in germany.
the merics study identified four strategies used by chinese manufacturers to conquer european markets: pure exports from chinese production, exports plus a development or design center in the target market, production in the target market, and acquisition of a local manufacturer.
Geely in a good starting position for market success in europe
The "exports plus" strategy is used, for example, by nio. The Shanghai-based start-up opened its design center in munich in 2015, when it was still known as nextev, and recruited top-class experts from BMW and other companies.
Chinese manufacturers aiways, BAIC, chery, FAW, geely and great wall motor also have design or innovation centers in germany. However, the example of byton shows that this is no guarantee of success. Its German subsidiary filed for insolvency in april.
the established manufacturer geely has a good starting position for success in europe. Since taking over the swedish manufacturer volvo in 2010, the carmaker from hangzhou has a foothold in the european market. in 2017, geely founder li shufu bought a 9.7 percent stake in daimler, making it the largest single shareholder in stuttgart.
"geely’s global buying spree was supported by the chinese government," writes study author sebastian. The group uses volvo’s know-how and research and development capacities and has a european production facility. At the same time, the company benefits from its economies of scale and can cut costs in procurement and production.
Starting in the fall, an SUV from the great-wall brand will be available for pre-order in germany.
It pays off. The plug-in hybrid volvo XC40 was one of the four best-selling electrified models in europe in the first half of the year. Now the company wants to conquer the continent with the all-electric luxury brand Polestar. The company is also cooperating with daimler: the smart car will soon be built in china, and cooperation on engines is also on the way.
The export strategy is also supported by the respective provincial governments in china, in whose region sustainable jobs are to be created in this way. Just how far this can go became clear in 2019, when the municipal government of hefei saved nio from insolvency.
But it is not only the Chinese carmakers who stand to benefit from the Chinese government’s ambitious export targets. "as long as production takes place in their territory, local governments are not too interested in the ownership of their local champions," knows merics expert sebastian.
German manufacturers produce in china for china and the world
In line with this, audi emphasized in its strategy for the period up to 2030, which was presented last week, that it intends to expand the range of electric cars produced in china. According to the motto "in china for china," the local manufacturer is "actively driving innovation," said china boss werner eichhorn. parent company volkswagen also wants to focus more on electric customers in china. Companies like bosch and continental, which have a strong presence in china, are also benefiting from the new export strategy. For newcomers like nio, the share of foreign suppliers is 70 percent, estimates sebastian.
the german premium manufacturer BMW is even embraced by the city of shenyang in northeast china almost like a local company. According to the provincial government’s plans, the region is to become a major export location for the automotive industry with the help of BMW. The plan to produce the all-electric ix3 exclusively in shenyang and to export it from there to the rest of the world fits in with this.
BMW was also the first foreign manufacturer to acquire a majority stake in a joint venture in the automotive sector. From 2022, the BMW brilliance automotive (BBA) joint venture is to be fully consolidated on BMW’s balance sheet.
The all-electric model is to be produced exclusively in shenyang and exported from there to the rest of the world.
The end of the joint venture constraint for non-Chinese carmakers is an amazing turnaround in chinese industrial policy. Instead of creating national champions, the government is now pursuing the goal of "establishing global value chains," according to the study. At least for the time being. Expert sebastian assumes that "this decision is likely to be temporary".
In the long run, the Chinese leadership will probably not tolerate the high market shares of foreign manufacturers on the domestic market, but also in exports. Most recently, more than 90 percent of e-car exports from china were factories of the U.S. manufacturer tesla, which produces for the world market in a gigafactory in shanghai.
