Chinese EV Makers Plan Major Market Push

Starting in the 1980s, European automakers dominated the Chinese market, reaping millions in sales with minimal local competition. Now, these companies must defend their home ground from a surge of advanced Chinese electric vehicles.

Chinese automotive giants BYD, Chery, and Great Wall Motor are planning to launch around 20 new models over the next five years. These companies are heavily investing in sales and marketing to secure a significant share of the European market, according to industry experts and insiders.

Strategic Market Penetration

Having spent years gaining market share from foreign competitors in China, the world's largest automotive market, Chinese EV manufacturers are now focusing on Europe. They have been studying European car buyers, hiring industry veterans, and selecting knowledgeable distributors to prepare for this move.

BYD and Chery have announced plans to manufacture cars in Europe. Chery will start production at Nissan’s former factory in Barcelona this year, while BYD aims to open its first European passenger car factory in Szeged, Hungary, by 2026.

Building Brand Awareness and Infrastructure

Chinese automakers are employing various strategies to break into the European market, from sponsoring major sporting events to expanding dealership networks and improving service operations to enhance resale values, which are crucial for fleet buyers.

Despite their current low sales volumes in Europe, Chinese brands like MG, owned by the state-owned SAIC, are gaining recognition. However, Great Wall recently announced it would close its European headquarters in Germany, though it remains committed to its launch plans in the region.

Rapid Expansion and Competitive Pricing

The influx of China-built imports into Europe is accelerating, with BYD tripling its European sales to 15,000 vehicles in 2023. BYD has introduced six electric models in Europe, rolling them out across 20 countries, and plans additional launches in the UK this year. Great Wall aims to release a new model annually in Europe over the next five years, while Chery plans to launch eight SUV models under its Omoda and Jaecoo brands in the next two years.

Learning and Adapting to Local Markets

Chinese EV makers have adapted their strategies based on extensive market research. They are designing models specifically for European consumers and leveraging substantial government support, which allows them to focus on long-term growth rather than immediate profits.

Chinese automakers enjoy cost advantages due to government subsidies and their dominance in battery minerals refining. In China, a fierce price war has led to extremely competitive EV pricing, alarming automakers in the US and Europe. In response, the US and EU have increased tariffs on Chinese EVs.

Comprehensive Market Strategies

Chinese manufacturers are not just competing on price. They are offering vehicles with high levels of standard equipment and features often sold as extras by Western automakers. Their approach is reminiscent of Japanese automakers' strategies when entering Western markets decades ago.

Chinese companies are focusing on ensuring high safety ratings, robust repair and service operations, and effective distribution networks to enhance resale values. This attention to detail reflects their understanding of the European market, where the total cost of ownership, including maintenance and resale values, is crucial for consumers.

Building a Presence and Consumer Trust

To boost brand recognition, Chinese automakers are investing in social media, event sponsorships, and partnerships with established dealer networks. For instance, BYD is rapidly expanding its dealership network in the UK, aiming for extensive coverage by next summer. Awareness of Chinese cars is growing, with more European consumers considering them as viable options.

BYD’s sponsorship of the Euro 2024 soccer championship, previously held by Volkswagen, is expected to significantly boost brand familiarity. This high-profile presence will showcase BYD's EVs and increase recognition among millions of viewers.

The French government has established a comprehensive agreement with the automotive industry to set new targets for electric vehicle (EV) sales. This pact, developed in collaboration with French business groups and unions, aims for significant increases in the sales of battery-electric cars and light commercial vehicles by 2027.

The agreement targets a fourfold increase in annual battery-electric car sales to 800,000 and a sixfold increase in electric light commercial vehicle sales to 100,000. While the pact does not specify exact amounts for new subsidies, it promises continued support for EV purchases and leases. Additionally, the contract includes a section on "ensuring our sovereignty," which involves stress testing supply chains for critical materials.

This new "strategic sector contract" is introduced as France and other countries raise concerns about the risk of over-capacity in China's EV market overwhelming their domestic industries. The European Commission has responded to these concerns by launching an investigation into China's support for its EV sector.

"The auto industry is part of our industrial culture and is facing a once-in-a-century change," said French Finance Minister Bruno Le Maire. "The transition is difficult, with strong competition from other countries, particularly China, so we need solidarity in the sector."

To counter the influx of Chinese imports, France has restricted financial support for EV purchases to vehicles with the lowest carbon footprint in production, effectively excluding many Chinese-made models. France is also the first country to use new European rules to support its emerging battery industry with green tax credits.

"Europe must adopt a trade policy that protects our industry, our jobs, and our technology," Le Maire said. "I decided to limit bonuses for EVs to cars that meet the strictest environmental norms, to enhance our production and confront increasingly tough competition."

The wide-ranging agreement also includes a framework for cooperation on innovation, retraining, strengthening the sector’s supply chain in France, and expanding the network of recharging stations.

The pact coincides with Chinese President Xi Jinping's state visit to France, during which EU-China tensions over EVs were expected to be a key issue. These tensions have escalated into a broader conflict, with Beijing launching a liquor dumping probe that could adversely affect French cognac producers.