Chinese electric vehicles, which are rapidly entering the market, seem to have encountered "stumbling blocks." European Commission President von der Leyen recently stated in the European Parliament that a countervailing investigation into electric vehicles imported from China will be launched to assess whether punitive tariffs are needed. She claimed that Chinese electric vehicles distorted the European market with low prices through high government subsidies. According to data from automotive consulting firm Inovev, 8% of electric vehicles sold in Europe this year are made by Chinese brands, and the European Commission predicts that this number may reach 15% in 2025.
For Chinese car companies, Europe is a fertile ground for export markets. Compared with the high tariff of 27.5% in the United States, the EU's tariff on imported cars is only 10%. At the 2023 Munich International Auto Show, known as the "wind vane" of the automotive industry, held from September 4 to 10, vehicle companies such as BYD, SAIC MG, Leap Motors, and Avita Technology, power battery companies such as CATL and Sunwanda Power, and smart technology companies such as Horizon, Black Sesame, SenseTime, Qingzhou Zhihang, etc., appeared on the stage with a high-profile "group" lineup, attracting a lot of international attention.
Although the EU's investigation is launched against China's electric vehicle exports, not all electric vehicles exported from China are Chinese-funded. China's electric car manufacturers exporting to the EU are mainly divided into three categories: Chinese car companies with European investment background, Chinese independent new energy car companies, and foreign-funded car companies such as Tesla and BMW that produce in China. Export car companies with Chinese brands, such as BYD, Great Wall Motors, and NIO, may be the main targets of the EU's anti-subsidy investigation. However, research data from Guosheng Securities on September 18 showed that the combined market share of BYD, Great Wall Motor, and NIO in Europe is only 1.1%, and the impact of the anti-subsidy investigation will be very small.
Brands with European backgrounds such as SAIC MG, Geely Lynk & Co, and Dongfeng Easyjet, as well as foreign car companies produced in China and exported to Europe, are the main sales forces of Chinese car companies in Europe. According to a research report by Soochow Securities, the total number of electric vehicles exported from China to Europe in 2022 is about 330,000. In addition to Tesla, which has nearly 200,000 vehicles, SAIC MG has 72,000 vehicles, Dongfeng Yijie has 48,000 vehicles, and Geely Lynk & Co has nearly 20,000 vehicles. The export volumes of other car companies are relatively small. Geely Lynk & Co, Dongfeng EasyJet, and Geely Smart can be produced in local factories of European partners. Analysts believe that this means that Tesla is likely to be the most "injured" in the anti-subsidy investigation. According to the 36Kr Finance official account on September 22, "The EU blocks China's electric cars, Tesla and German cars are at war?" ” article reported that market news said that Tesla has intended to transfer its production capacity exported to Europe to its US factory, which may be able to avoid the impact of countervailing investigations.
Regarding countervailing investigations, there are also huge differences within the EU. German Federal Transport Minister Wiesing recently expressed his clear opposition and warned that the German economy would be harmed as a result. Major German car manufacturers have also publicly expressed their disapproval of the EU's attempt to impose punitive tariffs. China is the largest overseas market for German automobiles. Sales data show that the three major German automobile groups Volkswagen, Mercedes-Benz and BMW sold a total of 4.71 million vehicles in China in 2022. The three companies' Chinese market sales accounted for 38.3%, 37% and 33% respectively. In the first half of 2023, Germany's imports of cars and parts from China increased by 75% year-on-year. Once the EU encounters countermeasures from China, it will inevitably affect the development of German car companies in the Chinese market.
Contrary to Germany, before last year's Paris Auto Show, French President Macron told the French media that Europe needs a strong policy to promote reindustrialization. He said, "The current data is cruel, more than 80% of electric vehicles are imported." Macron mentioned that he has set a goal for the French electric vehicle industry to be 100% made in France. The chief technical officer of Renault, the representative of French cars, has publicly stated that Renault cannot afford to fight a "price war" with Tesla and Chinese competing car companies. A UBS report pointed out that about 70% of Renault's sales come from Europe, but its market share in Europe only accounts for 10%, making it "one of the most risky companies in the European market." In China, French cars have been marginalized, with a market share of less than 0.5%, which is almost negligible.
The China Chamber of Commerce in the European Union issued a statement on September 13 that China's electric vehicles and upstream and downstream industry chain companies have continued to innovate and have accumulated overall industrial advantages in the fierce Chinese domestic market. This advantage is not formed by relying on so-called huge subsidies. The industrial advantage is reflected in the price advantage. Some market participants said that the EU's launch of a countervailing investigation will not affect the rise of China's electric vehicles. To some extent, the countervailing investigation may become an accelerator for Chinese car companies to go overseas. Analysts from the Gasgoo Automotive Research Institute believe that if the EU launches countervailing sanctions, Chinese car companies will inevitably accelerate the process of localized factory construction and localized operations in Europe.
At present, many car companies have decided to build vehicle base projects in Europe. SAIC MG sold a total of 150,000 units in the European market from January to August, a year-on-year increase of 1.5 times. The cumulative sales of its model MG4 in the first half of the year exceeded 30,000 units, ranking among the top ten pure electric vehicle sales in Europe. According to Securities Daily, SAIC Motor announced on the afternoon of July 4 that it is currently planning to establish a vehicle factory in Europe. BYD's sales in the European market in July increased 1.8 times year-on-year. The company also stated at the 2023 Munich Auto Show that it planned to determine the location of its first European factory by the end of 2023.
In recent years, China's new energy vehicle exports have surged. Data from the Passenger Car Association shows that from 2017 to 2022, China’s exports of new energy vehicles increased from 170,000 to 1.12 million. As of 2022, my country's exports to the EU will account for approximately 47.1% of electric vehicle exports, an increase of 22.1 percentage points compared to 2017. A McKinsey report pointed out that European car companies' market share in Europe and China has been shrinking since 2019. Among them, the European market share dropped by 6% and the Chinese market share dropped by 5%. International investment bank UBS predicts that with the rise of electric vehicles in China, Western automakers may lose one-fifth of their global market share.
The automobile industry has always been Europe's core industry, providing 14.6 million jobs and accounting for about 7% of the EU's GDP. It has brought Europe a trade surplus of 70 billion to 110 billion euros every year in the past ten years. However, it has been slow in its electrification and intelligent transformation in recent years. In contrast, China's new energy vehicle industry is in a period of accelerated development and maintains leading advantages in both technology and cost. From a technical perspective, China accounts for 76% of the world's power battery production capacity, occupying an absolute position. The European power battery industry is weak, and the investment per unit of production capacity is more than twice that of Chinese power battery companies. In addition, UBS dismantled the 2022 BYD Seal and found that 75% of the model's parts are manufactured in-house, with the rate of self-supplied parts reaching twice the global automotive industry average. According to UBS analysis, even if BYD sets up factories in Europe, it will still have a 25% cost advantage compared with North American and European car brands.
According to an article "Europe, "Can't Stop" Chinese Car Companies" on the Gasgoo Daily Express public account on September 20, multiple sources showed that in order to cope with competition from Chinese car companies, the three major car companies Volkswagen, Renault and Stellantis Group plan to reduce the production costs of electric vehicles and launch more affordable electric models. The prices are around 25,000 euros, and will be released in two or three years.