Chinese EV (electric vehicle) manufacturers are setting their sights on Europe’s rapidly growing EV market. Sales in Europe have surged by 55% in the first seven months of 2023, with approximately 820,000 EVs sold, constituting 13% of total car sales. Chinese companies, including BYD, Nio, and Xpeng, are expanding their presence in Europe, with Xpeng planning further market expansion in 2024 and Zhejiang Leapmotor Technology announcing five new models for overseas markets, including Europe.
Increasing Market Share
Data from auto consultancy Inovev shows that Chinese EV brands have captured 8% of the European EV market in 2023, up from 6% in 2022 and 4% in 2021. This influx of Chinese EV makers has prompted concerns in Germany. Hildegard Mueller, president of the German Association of the Automotive Industry, expressed apprehension that Germany is losing competitiveness and emphasized the need for substantial investment in electrification.
Chinese EV Price Advantage
One significant advantage Chinese EVs hold is their competitive pricing. In the first half of 2022, the average cost of an EV in China was less than €32,000 ($35,000), compared to approximately €56,000 in Europe. European automakers are actively working to level the playing field by reducing production costs and enhancing range and efficiency. Both Mercedes-Benz and BMW are launching new models with cost-efficiency in mind, while Volkswagen aims to cut battery cell costs by 50% through collaborations with Chinese partners.
Acknowledging the Gap
Xpeng President Brian Gu acknowledged that European automakers are currently lagging behind their Chinese counterparts in the EV market. He highlighted European car manufacturers’ significant commitments to EVs through partnerships and technology investments. However, Gu noted that Chinese companies excel in battery production, a critical aspect where costs can account for up to 40% of an EV’s total cost.
Importance of Collaboration
Auto industry analyst Ferdinand Dudenhoeffer emphasized the importance of Chinese battery manufacturers establishing a presence in Germany to help reduce EV costs. He cautioned against strategies that might deter these companies, stressing the necessity of cooperation between Chinese battery firms and German policymakers.
The aggressive expansion of Chinese EV makers in Europe has heightened competition in the EV market. This competition has propelled European automakers to enhance their offerings and reduce costs to remain competitive. The future of the EV market in Europe is likely to witness increased rivalry between Chinese and European manufacturers.