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After testing the waters, Chinese automakers are diving into Europe

September 20, 2022

Chinese automakers are making their presence known in Europe by taking on their Western counterparts, writes Autovista24 reporter Rebecca Scheid.

Europe’s auto industry is dominated by local players, with the Volkswagen (VW) group taking the top spot as the region’s largest automaker. But that’s not stopping new players from China from entering the crowded European market, especially with electrification in full swing. Competitive product portfolios, customer-centric sales models and the will to succeed are defining the new players.

China and Europe are the two largest electric vehicle (EV) markets in the world. While European automakers have long exported cars to the Asian country, where they operate multiple factories and joint ventures with local companies, the tide has now turned.

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Consulting firm Inovev noted that in the first half of 2022, about 75,000 new cars from Chinese manufacturers were registered in Europe, and it expects 150,000 units for the rest of the year.

Electromobility opens a window of opportunity for these Asian manufacturers as they strive to build recognizable and reputable brands in the region. Nio, XPeng, BYD, Great Wall Motors (GWM), Hongqi and BAIC are just a few of the automakers working to capture established leaders around the world.

Chinese car manufacturers follow clear ambitions. increase their international competitive advantage after years of supplying mainly automobiles to developing economies. Although many consumers in Europe are still unfamiliar with “Chinese-made” cars, this is beginning to change.

“To date, more than 10 Chinese automakers have launched or are planning to launch Electric Vehicles in Europe. Two of these have achieved some initial success; Polestar and MG are among the top 20 best-selling EVs in Europe,” said Ian Ian, senior managing director of global consultancy Simon-Kucher. Autovista24. MG is owned by SAIC Motors and Polestar by Geely, both Chinese businesses.

“In contrast, other Chinese automakers have barely made their mark in Europe. But that could soon change as Nio and Co are making inroads into major European markets like Germany after testing the waters in Norway,” Jan added.

Electric drive offers

GWM also hopes to gain a foothold in Europe. The Chinese company manages the Wey premium SUV brand and produces all-electric vehicles under the Ora brand. Last month, the automaker signed a partnership with Emil Frei, Europe’s largest dealer group, as it prepares to launch in Germany in the final quarter of the year.

As Europe’s largest automotive industry, Germany is a strategic market for Chinese automotive brands, especially as the country is one of the most EV-friendly territories in Europe. Data from Germany’s Federal Motor Traffic Office (KBA) show that in the first seven months of 2022, about 7,000 news vehicles from Chinese manufacturers were registered.

The International Association of German Automobile Manufacturers (VDIK) has seen an increase in membership as more Asian brands enter. “There have already been separate attempts by new producers from Asia to enter the European market. But what we are experiencing now has other dimensions. These are very serious efforts to support here,” VDIK said Autovista24.

Newcomers from Asia want to introduce high-tech quality cars to European customers who are already spoiled for choice. GWM plans to launch an all-electric model known as the Funky Cat, which is being described as a rival to Volkswagen’s ID.3. It will also launch a plug-in hybrid (PHEV), the Coffee 01, in the coming weeks.

Eye-catching names aside, the company said the two models will mark its highly publicized entry into the market. The collaboration with Emil Frey is a significant and important milestone for GWM, although the details of the collaboration are still under wraps.

“Currently, we are working hard to create structures and implement projects. We would like to first inform our potential partners at dealer level before further public communication,” said Emil Frey Group. Autovista24.

The electricity market in Europe is ripe for disruption, and Chinese brands not only aim to match their European counterparts, but also have ambitions to challenge them in terms of range and price.

GWM’s battery electric vehicle (BEV) is expected to have a range of up to 400 km, with list prices likely to start at €30,000. Its PHEV model, Wey’s flagship vehicle, will reportedly have a range of 150 km at a cost of around €50,000. Both models received a five-star Euro NCAP rating this month, showing the company is up to the task. With Euro NCAP testing more Chinese cars than ever before this year, it says “the Great Wall is truly setting the benchmark for others to follow”.

Technology, Communication and Innovation

While security and pricing strategy play a key role for Chinese brands entering Europe, innovation and technology are also opening doors for them. Asian automakers are eager to offer the latest technology and communications services, finding more and more ways to differentiate themselves from their Western rivals.

“While European OEMs may view electrification purely as a powertrain conversion, Chinese EV newcomers have taken a different product approach. Chinese EVs are usually equipped with advanced technologies that are more attractive to the younger generation,” Yang said.

“The Chinese are taking smartness to the next level as products are extended. consumers will be able to upgrade the software as well as some hardware so they can not only own the car, but grow with it. Such customer engagement was not seen in Europe,” he added.

Luxury brand Hongqi, part of China’s FAW Group, is showing off cars that can park and charge on their own without the need for charging sockets, while here in Europe carmakers like Volvo are still testing EV wireless charging systems. Earlier this year, Hongqi delivered the first batch of its E-HS9, an all-electric smart SUV, to customers in Norway. It recently struck a deal with a Dutch automotive retailer to distribute its cars in the country.

Meanwhile, Nio is on an expansion course in Europe, with one of their core services including battery swapping, another way to stand out from the crowd. This allows customers to lease the battery, the most expensive part of the EV, instead of buying it, which then shaves thousands of euros off the initial list price. At special exchange stations, Nio drivers can exchange their dead batteries for fully charged ones, all in less than five minutes, and the company is now planning to manufacture exchange stations in Hungary.

Source: FAW Group

Nio’s peers in Europe include startups such as XPeng and Aiways, the latter of which wants to offer “exciting” and affordable cars. Aiways’ first all-electric SUV, the U5, has been shortlisted for Europe’s 2022 Car of the Year. Priced at €40,000, the U5 comes with a range of 400 km and can charge from 30% to 80% in about 27 minutes. The manufacturer plans to launch one new model each year, saying its cars are “reasonably priced”.

“Traditional car manufacturers still have an advantage in terms of absolute sales numbers, but with increased awareness, new models that are both price competitive and attractive in terms of design, we have a good chance in the European market. We are in 15 European countries and already have products on the road,” Aiways said Autovista24.

Then there’s Geely-owned Lynk & Co, which wants to challenge automotive conventions with its subscription-based business model. Described as ‘Netflix for cars’, the company runs so-called ‘clubs’ across Europe. Its membership-based approach allows users to access the machine on a monthly basis. Its PHEV is known as the 01, and in Germany alone, 2,000 Lynk & Co vehicles were newly registered in the first seven months of the year.

“Our key differentiator is our business proposition, where our members can purchase a great car that they can keep forever or leave at any time,” said Lynk & Co. Autovista24. “Subscribe for €550 a month or take Lynk & Co 01 with insurance, maintenance and more included. Or go all-in and buy your 01. Our Lynk & Co 01 offers up to 70km of all-electric range so our members can commute on electric power but go and explore with a hybrid powertrain.

Dethrone Tesla?

Source: Lynk & Co

Chinese Electric Appliance brands are increasingly grabbing headlines, with media recently claiming that auto giant BYD sold more electric cars than Tesla in the first half of the year. While BYD posted about 640,000 EV sales between January and June, compared to Tesla’s 564,000, this figure is crucial to include PHEVs.

However, BYD’s numbers are impressive as it sold around 330,000 BEVs during that time, up 240% from a year ago. It has become one of the world’s largest power producers and is planning a market expansion in Europe this fall, after launching in its test market, Norway, nearly a year ago.

Like other Chinese brands, it promises fast deliveries, a key selling point, and is initially aimed at the Benelux and Nordics. The company has partnered with select dealers and plans to introduce three BEV models in the region, including a “European-style” C-segment SUV.

BYD appears to want to emphasize this point, no doubt to attract European customers. The manufacturer works with more than 200 designers from countries such as Italy, Spain, Switzerland and Germany.

State-of-the-art Chinese-made smart cars with looks that match, if not exceed, what European drivers are used to, especially when it comes to the latest technology, are shaking up the market. Europe’s legacy car brands will be watching closely in the coming months and years.