“We want to be among the top three brands in the region [Eiropā] and number one if we can,” Michael Shu, head of the European market at China’s leading carmaker BYD, told the Financial Times (Michael Shu). The former president of Volkswagen, Herbert Diess, also points to BYD concern, which is financially supported by US multi-billionaire Warren Buffett, as a potential competitor that the German automotive industry should be most afraid of (Herbert Diess).
Here it should be taken into account that over the past 25 years, Chinese companies have become the main experts in the production of electric and hybrid cars, and China absolutely dominates in the extraction and production of almost all necessary resources, materials and components. We already wrote that, for example, the EU imports 72% of the rare earth metals it needs, which is a crucial component in the production of electric cars, from China.
Since the Chinese market has already been largely conquered – the Chinese buy proportionately much more electric cars than the rest of the population – such Chinese companies as the already mentioned “BYD”, “Nio”, “Li Auto”, “Xpeng”, “Cherry” and “Great Wall” ” have begun to look far into the wide world. One of their goals is to bring their brands to Europe, not only through sales, but also by locating their factories. And if in previous decades, Chinese automakers gradually accumulated experience in the field of electric cars, now, with the ban on gasoline and diesel engines in Europe from 2035, their big opportunity has arrived, writes the “Financial Times”. We can also interpret it as the fact that the EU has found another way to shoot itself in the foot economically through the uncompromising “green course”.
Tesla, owned by Elon Musk, is well known in the West for the production of electric cars, but it is a private enterprise. In China, on the other hand, the state has taken care of the development of the new industry, in accordance with its leader Xi Jinping’s vision of energy and technological self-sufficiency. Between 2009 and 2017, the Chinese government has invested about 60 billion US dollars in the development of electric cars, and between 2018 and 2021, another 66 billion, according to estimates by the prominent US think tank Center for Strategic and International Studies.
As a result, China’s technological progress has been much faster than we expected, Financial Times” admitted the president of the Japanese car manufacturer “Nissan”, Makoto Ushida (Makoto Uchida). And this boom is not limited to electric cars. China took Germany’s place as the world’s second-largest auto exporter last year and is expected to overtake Japan as the world’s top exporter this year. According to the calculations of the audit firm “KPMG”, Chinese companies could occupy 15% of the new car market in Europe in the next two years, writes “Financial Times”.
Germany came to the realization that its roads may now be full of cars of Chinese origin last October, when BYD signed a contract with autonomous company Sixt to purchase a 100,000-unit BYD fleet until 2028. Therefore, it is not surprising that German and European automakers in general are seriously worried about future prospects. The initial reaction of European companies was to lobby for a maximum postponement of the ban on internal combustion engines. As said by the president of the French manufacturer Renault, Luca de Meo (luca de meo), [ES institūciju uzspiestās] the changes “will cost more than one billion euros for development” and will allow “the Chinese to get their foot in the door” during the transition period.
Some other European car manufacturers are not panicking yet. As an unnamed executive at a major company told the Financial Times, “we have to be analytical.” “Yes they are [ķīnieši] will take their market share, they will play a vital role. But we have a design that appeals to European consumers, we do [tirdzniecības] networks and we have fleets. I am not relaxed, but at the same time the situation is far from an existential threat.”
An interesting question is the price of the potential Chinese bids. Experience suggests that the production of electric cars in China will, as usual, use the cheap internal labor reserves, as well as the effect of scale, to enter the European market with an aggressive low-price strategy. But at least for now, it doesn’t look like that. BYD sells its new models at exactly the same price as the comparable Volkswagen ID.2. According to some experts in the Financial Times, this could be a sign of the Chinese desire to get rid of the image of a manufacturer of cheap, medium-quality products, positioning their electric cars on the market as high-quality and technologically advanced.
2023-07-10 02:15:12
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