China's Low-Cost Electric Vehicle Offensive in Europe... Local Car Manufacturers on Edge

China-made Sales Share in Europe 8% from Jan to Jul This Year
Rapid Growth from 4% in 2021 to 6% Last Year
Renault CEO "Must Reduce Cost Gap"... 'Imminent Risk'

As Chinese electric vehicle (EV) companies rapidly grow in the European market, the long-established European automakers are becoming increasingly anxious. There is a clear concern that they might lose their foothold even in their domestic markets due to China's aggressive low-price strategy with affordable EVs.

On the 4th (local time), a day before the opening of Europe's largest motor show, 'IAA Mobility 2023' in Munich, Germany, The Guardian and major foreign media reported that the share of Chinese-made products in the European EV market is rapidly expanding, causing tension among European companies. 'IAA Mobility 2023' will be held from the 5th to the 10th.

[Image source=Reuters Yonhap News]

According to Innovebb, an automotive consulting firm, Chinese-made EVs accounted for 8% of all EVs sold in Europe from January to July this year. The share of Chinese EVs, which was only 4% in 2021, rose to 6% last year and increased by another 2 percentage points this year. The number of EVs sold by Chinese brands in Europe this year is approximately 86,000 units.

In particular, in the UK, one-third of the EVs sold this year were Chinese-made. The Guardian cited Schmidt Automotive Research, reporting that 5% of new car sales in the UK from January to July this year were Chinese-made, ranking second in market share after Sweden.

The Guardian stated, "Chinese brands have long struggled to enter the European market due to a reputation for low-quality cars, but with the emergence of new battery electric technology, the harsh criticism toward Chinese brands is gradually disappearing."

BYD, which Warren Buffett has invested in, has grown into a major EV manufacturer following Tesla, the world's largest EV company. Other Chinese companies such as Nanderdsdi and Nio are gaining attention not only in Europe but worldwide. European automakers, traditionally dominant in countries like Germany, France, and Italy, are worried about potentially losing market share to China even within their own countries.

The competitiveness of Chinese EVs lies in lithium-ion battery technology, the core of electric vehicles, and the cost-effectiveness based on it. China holds over 60% of the lithium-ion battery market share. As a result, Chinese EV manufacturers have gained competitiveness in terms of both price and technology. Regarding cost-effectiveness, the average price of Chinese EVs was 32,000 euros (about 46 million KRW) in the first half of last year, significantly lower than the European average EV price of 56,000 euros.

Luca de Meo, CEO of French automaker Renault, said, "We need to narrow the cost gap with Chinese companies that started EV development a generation earlier than us," adding that prices will drop as manufacturing costs decrease. He revealed that the R5 EV, scheduled for release next year, will be priced 25-30% lower than the Scenic or Megane models as part of efforts to close the price gap with Chinese companies.

Hildegard M?ller, Chairwoman of the German Association of the Automotive Industry (VDA), emphasized, "We (Germany) are losing competitiveness," stating that the 'IAA Mobility 2023' event demonstrated how essential investment in electrification is in Germany under the pressure of global competition. Chinese automakers participated in large numbers at the event, confidently showcasing their EV technology.

Earlier, Oliver Zipse, CEO of BMW Group, expressed concern on the 3rd that Chinese companies have exposed the European industry, especially low-cost model manufacturers, to an "imminent risk."