Abstract:
Passing by Zurich Airport, I saw the huge billboard on the wall of the building in front of the terminal, which was estimated to be one or two hundred square meters. It stands where the cars go. You can see it just by raising your eyes as you get into the car after leaving the airport. Being in a foreign country made a particularly deep impression. Come to think of it, everyone who speaks German, French, Chinese, and English will see it.
More than 32 million passengers passed through Zurich Airport last year. It is said that the ratio of rich people to people with big ideas here is one of the best among European airports.
On October 12, I visited the "Paris Auto Show", the 91st edition at the Porte de Versailles. I watched five of the Geely platform activities alone.
Six brands, including Geely, Lynk & Co, JK, Volvo, Smart, and Lotus, are scattered across the five exhibition halls, ranging from household scooters to sports cars. Next to Lynk & Co are GAC, Xiaopeng, Ideal... and I also met He Xiaopeng. Later, I met the Changan team by chance at a Sichuan restaurant.
This oldest auto show with a history of 128 years has ushered in the most "Chinese" edition. For Europe, the Paris Auto Show is not only a feast of automobile culture that lasts for a century, but also the most vivid microcosm of the current power shift, supply chain restructuring and geopolitical competition in the global automobile industry.
Geely has European blood. He bought Volvo in 2010 and has since owned London Taxi, Lotus, and Half Smart. Li Shufu was once the largest shareholder of Daimler.
Later, I passed by Vienna and found that the parking lots at the airport were still full of traditional petroleum vehicles. My friend said, "Look, Europe is still a blue ocean for new energy vehicles." It will take many more cycles for Chinese cars to trek westward.
｜Real shot of Austrian airport parking lot
Same day
On October 12, two things happened side by side.
First, the Ministry of Finance and the State Administration of Taxation issued an announcement: Starting from April 1, 2027, the export rebate rate for new energy vehicles will be reduced from 13% to 9%, covering 67 categories, including pure electric, plug-in hybrid, and extended range.
Secondly, on the same day, the Paris Auto Show opened. About 20 Chinese brands came, doubling the number two years ago and occupying one-third of the booths.
My family received a small tax refund, but Chinese cars over there in Paris pressed me. Some journeys are ongoing and there is no choice but to look back.
Cui Dongshu of the China Passenger Car Association Branch said that if the four points are missing, short-term export costs will rise. Affordable cars with low gross profit margins will be the hardest hit. This will also provide less evidence for overseas anti-subsidy investigations, forcing car companies to build factories overseas. Another senior executive of an independent brand believes that it will have little impact on luxury brands.
Bank of China International released a report stating that lower tax rebates will also push car companies to shift from exporting Chinese-made vehicles to overseas production and localization. Leaders with stronger competitiveness, better cost control and overseas manufacturing capabilities will be easier to adapt, and industry consolidation may be accelerated. According to the export structure, Chery, Geely Automobile, Great Wall Motors, etc. have received a relatively large buffer due to their high proportion of fuel vehicles and hybrid vehicles.
Tax refund is calculated based on FOB price. A car worth 100,000 yuan will be refunded 4,000 yuan less, and the already thin profit will be even thinner; but when spread over a car with a European price tag of 119,500 euros, it is much lighter. This price is exactly the starting price quoted by Ji Krypton 9X in Paris. The first batch of 200 units was ordered before the quotation was made.
Blood
When Geely took over Volvo from Ford in 2010, it was said that it was like a snake swallowing an elephant, and not many people were optimistic about it. Li Shufu said at that time, "Geely is Geely, and Volvo is Volvo." In the next ten years or so, Volvo's headquarters will still be in Gothenburg, and its factories will still be in Torslanda and Ghent. When Europeans buy an XC60, they rarely think of Hangzhou Bay.
The blood has been flowing in one direction for more than ten years. Chinese money goes in, the Chinese market supports it, but the European brand is still displayed.
A French consulting agency has calculated that the share of Chinese car companies in Europe in 2025 will be 6.0%, and including Volvo, it will be 8.5%. The extra two and a half points are the blood of Geely buried in Europe. Everyone knows that it is there, so it has to be included in a new row when counting.
Chen Yinke talked about Li Tang, saying that he took the powerful blood from beyond the Great Wall and injected it into the decadent body of the Central Plains. The old stains were removed and the new machine was restarted. Volvo in 2010 was a liability on Ford's books. Geely injected a tube of Dongfang's blood into it. Now this lineage has become ".co", cooperation, links, and exploration by both parties in different scenarios.
Sixteen years
In 2010, China's economic aggregate surpassed Japan's and ranked second in the world. The Geely deal was signed in Gothenburg in March and delivered in August, priced at US$1.8 billion. At that time, few people talked about a national matter and a family matter in the same place.
If you peel these sixteen years apart, each layer will go at a different speed. The fastest growth in scale: Volvo has gone from more than 370,000 vehicles a year to more than 760,000 vehicles, Geely has gone from 400,000 vehicles to 3.02 million vehicles, and China's automobile exports have increased from 500,000 vehicles to 4.91 million vehicles in 2023, surpassing Japan for the first time. The name Japan has been crossed twice in thirteen years.
It took ten years for technology to turn around. In 2013, Geely set up the China-European Automotive Technology Center in Gothenburg. Engineers from both sides worked in the same building and co-authored the CMA platform. Both the Volvo XC40 and Lynk & Co's first cars came from here.
In a few years, Geely will come up with a vast pure electric architecture. By 2023, Volvo's smallest EX30 will also be installed, and it will roll off the assembly line in Ghent, Belgium in the spring of 2025. The river of technology that flowed from Gothenburg to Hangzhou Bay more than ten years ago flows back here.
People walk the slowest. The center in Gothenburg has changed three signs in thirteen years. Most of Volvo's managers are Europeans, and it will be listed in Stockholm in 2021. This year, its CEO took the initiative to open European factories to Geely's brother brands, and took over Lynk & Co's business in Europe. It was unclear who was supporting whom.
The outermost layer is wrapped in a layer of weather, which is intertwined with the inner layers. Around 2010, Europe was stuck in a debt crisis and was looking forward to orders and capital from China. In 2019, the EU assigned China the triple status of partner, competitor, and institutional rival. The investment agreement negotiated at the end of 2020 was frozen in the second year. In 2023, it launched a countervailing investigation on Chinese electric vehicles, and in 2024, it increased taxes.
Geely caught up with those years when the weather was still warm. Today, if a Chinese company wants to buy another Volvo, Europeans probably won't agree.
Name
On the big screen at Jikrypton’s booth was a line of English, to the effect that it meant the power of a giant and the soul of Europe. Giant means auspiciousness, and the soul is in Gothenburg. But 9X, who was surrounded most tightly at the booth, didn’t have many European things on him.
9X was developed in China: a super electric hybrid, 900 volts, three motors, the most domestically equipped model with more than 1,000 kilowatts, and can accelerate from 0 to 100 kilometers in just over three seconds. It first ranked first in sales among large SUVs over 500,000 yuan for several months, with an average transaction price of more than 530,000 yuan. More than 7,000 units were delivered in September, and then it was sent to Europe. It first appeared at the Monaco Yacht Show in late September and entered Paris in October.
Volvo, Lotus, and Smart all bought European names and kept them in their own yards. Ji Krypton is reversed. The name was chosen by itself. The car was developed by Chinese engineers in the Chinese market. It then used the design of Gothenburg, the headquarters in Amsterdam, and the channels established by Europeans to sell cars worth more than 110,000 euros clearly as a Chinese brand.
The blood is still that of Europe, but the name is changed to my own. I thought the breakthrough was here.
Of course, you can’t say too much. Jikrypton has been in Europe for three years, starting only in Sweden and the Netherlands. At the beginning of this year, Schupet, the head of Europe, said in Brussels that the number of dealers will be expanded from 30 to about 100, and he also admitted that he had not sold many before.
When we arrived in Paris, Jikrypton said that European deliveries had increased by 200% this year and had entered 22 countries; in September, Geely, Lynk & Co, and Jikrypton sold more than 10,000 vehicles in the EU in a month for the first time. But in August, BYD sold more than 26,000 vehicles in the EU; by early October, more than 70 Jikrypton 7X and more than 4,900 Tesla Model Y 4900 vehicles were on sale in Spain.
200% growth, the foundation is still small. There is a different algorithm for luxury car accounting. Two hundred 9Xs were ordered before the price was quoted, and they were nowhere to be seen on the sales list. There is still a long way to go.
Account
The EU will impose additional countervailing duties on Chinese pure electric vehicles in 2024. Geely’s first level is 18.8%, which is on top of the 10% import tax. In January this year, the European Union proposed a way to replace taxes with lowest price commitments. Prices are based on models and configurations, and investment plans in the EU are also taken into account. It also said that if companies sell hybrids to the EU at the same time, the commitment will be more difficult to accept, fearing that one side will stick to the other.
Looking back at the cars Geely displayed in Paris, the Monjaro EM-i is a plug-in hybrid, the Lynk & Co 07GT is a plug-in hybrid, the Galaxy Battleship 700 is a plug-in hybrid, and the flagship 9X is also a plug-in hybrid. A brand that started out as a pure electric vehicle has brought a flagship with an engine to Europe. Schupet said at the beginning of the year that Europeans have a lot of demand for plug-in hybrids, and selling plug-in hybrids can also avoid tariffs on Chinese pure electric vehicles. From January to September, China exported 1.557 million plug-in hybrids, an increase of 1.5 times. In August, for every three plug-in hybrids sold in Europe, one was a Chinese brand.
Switzerland is another crack. It is not in the EU, and countervailing duties are out of the question; starting from 2024, all industrial product tariffs will be exempted. Chinese cars will not pay any tariffs, and 20% of new cars will be electric. The person in charge of Jikrypton Switzerland said that Swiss customers are picky, knowledgeable about technology and value four-wheel drive. There, Ji Krypton is handed over to the Emil Frey Group, which also represents Volvo and Polestar. It currently has ten stores and will have twenty by the end of the year. The account behind the billboard at Zurich Airport should be calculated in this way.
Three barriers are stacked up, one is tighter than the other for cheap cars, and there are gaps everywhere for expensive cars. This is the most stressful thing.
Factory
A seam is just a seam, and the real lock is in the factory.
On August 17, Geely Auto announced that it had sold 474,000 units overseas in the first half of the year, an increase of 158%. The full-year overseas target was raised from 640,000 units to 920,000 units. On the same day, Li Shufu resigned as chairman of the board of directors of Geely Automobile, and An Conghui took over. An Conghui said that in the long run, two-thirds of sales will be overseas, and the key to large-scale overseas expansion is localized production. Starting from 2028, high-end models of Ji Krypton and Lynk & Co will be manufactured in Volvo’s European factories.
Volvo's Samuelsson has long said that he is willing to open the door and named Gent, and he must first raise Gent's competitiveness. In July, Geely formed a joint venture with Ford in Valencia, Spain, to share Ford's production capacity. The first model is the EX5, which will be put into production in 2028. I took over Volvo from Ford sixteen years ago, and now I use Ford's workshop to build my own cars. The general trend of the world, divisions and mergers are all the narrative of time.
In the past ten years, it was Geely that donated blood to Volvo. Later, it was Volvo's turn to take advantage of the old rules of factory buildings, workers and car building, and turned back to support Ji Krypton and Lynk & Co. Where the factory is built is also a bargaining chip on the negotiating table in Brussels.
Texture
Chinese companies are going to Europe to sell cars one after another. What is on display at the auto show is the car, but there is another layer underneath the car: where the engine comes from, who will sell it, who will repair it if it breaks, whether there will be subsidies, and how much it will be worth after driving it for three years.
In the face of complexity, it is impossible without tension.
Horse Power, a joint venture between Geely and Renault, is headquartered in London and has factories scattered in Spain, Portugal, and Romania. It has a hybrid assembly that can be directly installed into the subframe of a pure electric vehicle and will be launched in 2027. The EU's countervailing duties only apply to pure electric vehicles. In the future, Geely will build plug-in hybrids in Valencia, and the heart does not need to be shipped from China. In March this year, Geely merged its two R&D centers in Gothenburg and Frankfurt into Geely European Technology, reducing the time difference between a car's domestic launch and its European launch from more than one year to less than half a year. 9X This journey took more than a year.
Selling cars and repairing cars has also been successful. Lynk & Co will be exclusively distributed by Volvo starting from January next year, and all stores and after-sales services will be supplied by Volvo. Xiaopeng, Great Wall, and Ling entered Europe and looked for distribution families like Emil Frey. Geely itself had a European distribution network. The black taxis on the streets of London are also built near Coventry by Geely's London Electric Vehicle Company. Jikrypton served as a travel partner for the Diamond League Track and Field League, following the seven races, and invited Dutch 400-meter expert Claver to endorse it, hoping to be remembered slowly.
French subsidies are another level. It depends on the environment. When the carbon emissions from steel, aluminum, batteries, assembly, and transportation are calculated, the Chinese-made MG4 and BYD Yuan PLUS are blocked, and the price must be within 47,000 euros. In the future, when the EX5 is made in Valencia, whether the French can get thousands of euros from it depends on where the body is.
The other side of the mirror
It is not that easy for Chinese car brands to gain a foothold in the high-end market in Europe.
European consumers have their own standards for judging luxury cars. Brand accumulation, design language, long-term reliability, and value retention performance in the used car market will all influence the purchase decision.
60% to 70% of new European cars are fleets and leasing, and the monthly rent depends on how much they will be worth after three years. China’s pure electric cars have just over 40% after three years, Tesla’s 46% to 48%, and German brands around 50%.
An industry insider in the UK said that when selling cars in Europe, what you sell is the residual value. Xiaopeng has set up a residual value management committee for this purpose, and BYD has extended the battery warranty to eight years. Among the current registration records of Jikrpton 7X in the Spanish market, the company’s nominal share is relatively high, and second-hand transfer records are limited. For Chinese brands that have just entered the market, the product strength of new cars can be established quickly, but brand trust and residual value systems take time to accumulate.
There is another layer under the countertop. In August, Chinese brands accounted for 11.7% of new cars in the EU, another new high, and lawmakers are already discussing tariffs.
Next
The calendar is marked:
January 2027: 9X is delivered, and Lynk & Co will be distributed by Volvo.
April 2027: Tax rebate drops to 9%, Hawes’ new hybrid launches, London’s next-generation taxi revealed.
2028: Volvo’s European factories start manufacturing the XK and Lynk & Co, and construction starts in Valencia.
Geely Holdings says it will sell more than 6.5 million vehicles in 2030, one-third of which will be outside China.
No one can say for sure what Europe’s rules will look like in the future. In March, the EU came up with a draft industrial acceleration law. If a foreign company invests more than 100 million euros, if its country accounts for more than 40% of the world's total, half of its employees must be from the EU, and its shareholding must not exceed 49%. It must form joint ventures with European companies, transfer technology, and invest 1% of global revenue in EU research and development.
China says this is a double standard and will consider counterattacks if it does not change. France thinks it is not strict enough, Germany thinks it is too narrow, and all countries are still fighting.
In China in the 1980s and 1990s, foreign car companies entered into joint ventures, and the shareholding ratio could not exceed half, and technology had to be brought in. Santana, Jetta, and Buick all came this way. More than thirty years later, those who prescribe and those who take medicine have switched places.
Geely is a bit special here. Volvo, Lotus, London Taxi, and Horth Power all settled here more than a dozen years ago. The most likely scenario in the future is that it will become increasingly difficult to tell the nationality of the car. Gothenburg will draw the drawings, Hangzhou Bay will produce the three electric vehicles and software, Iberia will produce the engine, and Ghent or Valencia will produce the final assembly. It may also be that the wall is getting higher and higher, and Geely has to leave more things to Volvo's European face, while the extremely kryptonian name is retreating. Geely has no say which way to go.
The water flows west
Now that the water is heading west, it is blocked by more than one mountain, and there is a circle of wolves all around. Old European brands are protecting their jobs, while their Chinese counterparts are crowding into the same exhibition hall to compete for customers, Brussels is negotiating tariffs, and Beijing is also taking a bite of tax rebates. Musk's latest technology is already far ahead.
During those few days in Paris, I didn’t see anyone downcast. When Chinese brands hold press conferences, their booths are always crowded. In the first half of the year, the share of Chinese car companies in Europe reached 9.5%, compared with 5% a year ago.
When water touches a mountain, it goes around it. If it cannot go around it, it seeps into the cracks in the rocks. More than 20 years ago, Li Shufu went around begging for a birth certificate to build a car, saying please give me a chance to fail. He handed over the baton this summer, and the person who took over said that two-thirds of the team would be overseas.
I thought again of the huge sign at Zurich Airport. The screen was on, and planes were landing one after another. When a brand is erected in a foreign land, you can recognize it at a glance. After seeing it more and remembering it, you will gradually believe it and be willing to spend more money for you.
The car was still driving west as the fire was still strong.
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