Chinese-Made EVs Dominating European Market

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe is facing a tidal wave of Chinese-made electric vehicle (EV) imports, with reports that one in four of all EVs sold in the region this year will be made in China.

Last year, Chinese-manufactured EVs accounted for almost 20% of that total but are now on track to hit 25% this year according to research from Transport & Environment (T&E), a leading European clean-transport organization. The news comes at a time when the European Commission (EC) is considering imposing a tariff on Chinese EVs to protect European Union (EU) vehicle companies. The Commission has been conducting an anti-subsidy investigation since the end of last year, and subsidies could be levied from July if it finds that they have been receiving unfair subsidies. Chinese EV major BYD (Xi'An, China) launched its first wave of models in Europe in 2021 and in January, committed roughly US$550 million to building its first European car factory in Szeged, Hungary. For additional information, see January 8, 2024, article - China's BYD to Build First European Plant.

To date, most Chinese-made cars imported into Europe have been brands such as Tesla Incorporated (NASDAQ:TSLA) (Austin, Texas), Dacia (Bucharest, Romania) and BMW (Munich, Germany), but Chinese EV companies are growing fast. T&E projects that Chinese brands could reach 11% of the European EV market in 2024 and 20% in 2027. T&E stated that ramping up production of mass-market electric cars and investing in the European battery supply chain is the only way for EU carmakers to compete with Chinese brands but that tariffs would also help protect EV manufacturing.

Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E, said: "Tariffs will force carmakers to localize EV production in Europe, and that's a good thing because we want these jobs and skills. But tariffs won't shield legacy carmakers for long. Chinese companies will build factories in Europe and when that happens our car industry needs to be ready." Raising the EU tariff to 25% on all vehicle imports from China would make medium-sized sedans and SUVs more expensive than their European equivalents--making the case for EU manufacturing, T&E stated. Compact SUVs and larger cars imported from China are expected to remain slightly cheaper with such a tariff.

It claimed that it is "crucial" that a higher tariff is accompanied by a regulatory push to increase production of EVs, including electrification targets for company car fleets by 2030--on top of the agreed 100% clean car goal in 2035. It noted the numerous hurdles facing the EU, including the fact that lithium-ion battery cells manufactured in China are at least 20% cheaper than in Europe, and Chinese battery-makers are ahead on technology and supply chains. The U.S. is also attracting battery investments through generous subsidies. Europe will need to fast-track industrial measures including subsidies for clean and circular manufacturing and "Made in EU" targets to boost local cell production. Since neither is in place, a tariff could act as a stopgap measure. Compared to the U.S. and China, the EU currently has the lowest battery cell tariffs.

In February, Industrial Info reported on a global surge in investments for gigafactory projects and is tracking 54 active capital-spending projects globally, worth almost US$42 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the project reports. For additional information, see February 13, 2024, article - Gigafactories Ride the Electric Wave: Investments Surge Amid EV Battery Revolution.

In related news, BYD is looking to dramatically boost its European presence. After three years operating in a small number of countries and following a big push into new territories last year, it has secured more than a 1% share of the European EV sector. European chief executive officer, Michael Shu, said that it expects to grow that rapidly to 5% before its Hungarian car plant is commissioned in 2026. Speaking to Automotive News Europe, he expects the brand to grow once it starts making its car in Hungary. "When we build in Europe, we will be closer to customers, offering faster deliveries and people will trust us more. Our target is to become a European company and not a Chinese company doing business in Europe. It will be Europe for Europe. We will only use our advanced technology from China when we start building here, but the work will be done in a local factory, using local labor and a localized supply chain."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).