China has been at the helm of all the technological revolution taking place in the 21st century, oftentimes pioneering new products and in other instances improving on the work of others. The advancement and research are visible in every industry, but the Chinese companies have made the most inroads in the automotive sector, especially in the EV department.
In the last decade, the progress has skyrocketed with numerous Chinese e-mobility startups sprouting up from every corner of the country. It seems that big-pocket investors have sensed a shift in trends, betting all their money into the emerging EV sector. They want to compete with the likes of Tesla, Porsche, Uber, Lyft, and all others that are working on self-driving technology. As such, Chinese e-mobility startups have started to make their way inside Europe, trying to capture the lucrative market before the big guns jump in with full force.
Chinese EV companies like Aiways, XPeng, Nio, SAIC Motors, and BYD have already shown their intent in penetrating the market. Some of them have introduced exciting new models, while others have already booked orders, with deliveries starting soon.
Will these relatively new Chinese companies have an impact on the conservative European market? We will have to wait and see, but historic figures suggest that penetrating the market won’t be that easy.
In 2019, Chinese electric vehicle manufacturers accounted for only 0.6% of all EV sales in Europe. On the contrary, the traditional European manufacturers like Volkswagen and Renault reported a much higher number.
In such a volatile market, the best bet is Norway, which is one of the most progressive countries in the continent, as of now, when it comes to electric vehicle acceptance. In 2020, 54% of all vehicles sold in the country were electric, so it’s not a surprise that Chinese brands BYD and XPeng have decided to set up shop there. They are targeting nations that have a comprehensive EV policy in place so that the companies themselves don’t have to work hard on marketing their products.
Nio, SAIC Motors, and Aiway are all looking to expand as well in the coming months, by introducing cheap SUVs and crossovers. However, the distribution of new vehicles and managing the deliveries will be a tough ask. Chinese manufacturers do not have a strong presence in the West and as such, they do not have a comprehensive network to support their expansion in Europe. The pressure might ease off once new factories are set-up and a continent-wide distribution network is formulated. But before that happens, the startups would have to fight off the competition the old-fashioned way i.e through price.
The Chinese entry into the European market will be good for competition. Who knows? The new competition might just serve as an impetus for other manufacturers to work hard and cut prices. However, no matter what happens, the consumers will ultimately benefit.
Also published on LinkedIn (https://www.linkedin.com/pulse/taking-over-what-chinese-e-mobility-start-ups-european-stefan-mueller)