Electric mobility:why Europe fears the Chinese advance so much

IAA, the just concluded Munich show was the latest battleground between Europe and China on electric mobility.At stake is the future of European industry (and the climate...).

• IAA, at the Munich mobility show amid activists' protests and Europe's concerns about China's advance
• What is the challenge of reducing the production costs of electric vehicles in the Old Continent?
• Chinese manufacturers increased their EU sales by 55 percent in the first 7 months of 2023

IAA, Munich:the German mobility exhibition has just ended.And more than the numbers announced by the organizers (750 exhibitors, over 300 world premieres), who left their mark were the protests by activists and the many declarations expressed by the (few) European manufacturers present, almost all focused on concern for China's advance.In fact, the CEO's statements were not enough Renault, Luce de Meo, according to which the awaited electric version of the Renault 5, whose debut is expected in 2024, will cost 25 to 30 percent less than the current electric models, Scenic and Megane.“We need to reduce the cost gap with some Chinese manufacturers who started developing electric vehicles a generation earlier,” de Meo told Reuters at the auto show, adding that as production costs fall, prices will also fall .Yes, but in the meantime the electric market is not taking off.

And the concern of European investors is growing:as reported by CNN, has made headlines in recent days UBS's decision to downgrade Volkswagen and Renault stocks precisely because of the risks that increased Chinese competition would entail.In short, the European automotive industry is faced with a dilemma:while Europe supports the transition to electric vehicles with the announced stop to internal combustion engines 2035, sales data show that China has accumulated an advantage that is now unbridgeable.At the same time, the appeal of environmentalists and city authorities for fewer and fewer cars, possibly smaller ones, remains unheard.Meanwhile, the controversy grows.

The Greenpeace protests and the call for support in Hollywood

As anticipated, the second (and perhaps last...) edition of the IAA, in addition to fears over the Asian advance on electric mobility, attracted big names from industry, politics, but also from protest. Greenpeace has once again targeted the show with numerous protests directed at the automotive industry.In fact, despite the organizers' efforts to create an inclusive event, opening up numerous debates on sustainable mobility, there was no shortage of controversy.The organizers even asked Hollywood for help to have (paying...) entertainment celebrities like the actress Natalie Portman that told their "green" vision on mobility.The result?Greenpeace spokeswoman Marissa Reiserer explained it to AFP:“The automotive industry continues to rely on too many cars, too big and too heavy.With this business model the planet is sinking."To reiterate their point of view, Greenpeace activists immersed car parts in the artificial lake that gives access to the fairground that hosts the IAA, while on the demonstrators' signs eloquent messages such as "The climate crisis starts here” or “Stop driving climate change“.

 

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Over 40 percent of Asian exhibitors at the IAA in Munich

That European car manufacturers are facing a major challenge became clear at the IAA, where 41 percent of the exhibitors were Asian.The challenge, which appeared particularly evident among the stands during the days of the exhibition, is well known:If Europe wants to resist the advance of Asian manufacturers, it will have to produce electric vehicles at lower costs, more accessible and above all aimed at the economic needs of the average consumer.Yes, because while European manufacturers continue to consider electric cars as a good "not necessarily for everyone", and therefore with prices (and dimensions) still too high compared to endothermic models, Chinese manufacturers follow other, decidedly more targeted strategies .Any examples? BYD, Nio and Xpeng, among the major players in Chinese electric mobility, are targeting the European electric vehicle market with great effectiveness.Suffice it to say that sales of these brands in Europe increased by almost 55 percent to around 820 thousand vehicles in the first 7 months of 2023.These are numbers that alone represent approximately 13 percent of the entire European car market.

Xpeng, which recently announced the launch of electric models at very competitive prices (approx 20 thousand euros), according to data collected in Munich by Reuters, expects strong expansion in European markets in 2024 with the launch of numerous models.And so did many of the Asian exhibitors present at the IAA.According to automotive consultancy Inovev, 8 percent of new electric vehicles sold in Europe this year were produced by Chinese brands, up from 6 percent last year and 4 percent in 2021.Do you understand why Europe is right to worry?

The average cost of a Chinese electric car is around 30 thousand euros, over 50 thousand for European models

Electric car manufacturers, such as MG, or the aforementioned BYD, Xpeng, but also battery manufacturers such as the Chinese giant Catl.In Munich, the massive presence of Chinese electric vehicle manufacturers raised many concerns:“In Germany we are losing competitiveness,” he said Hildegard Mueller, president of the German Automotive Industry Association (VDA), adding that the Munich motor show showed “how the strong pressure of international competition” makes it essential for Germany to invest more in electrification.And if Germany, among the leaders of electric mobility with the Volkswagen group, is worried, let alone countries like Italy, France or Spain.And to understand better just take a look atprice analysis carried out by Jato Dynamics, according to which in the first half of 2022, the average cost of an electric vehicle in China was less than 32 thousand euros, compared to approximately 56 thousand euros on average in Europe.

Are you sure it is worth waging "war" against China?

But the concern of European manufacturers emerged on more than one occasion during the German event:“The basic car market segment will disappear or will not be produced by European manufacturers,” BMW CEO Oliver Zipse declared during the show, referring to China's advance on European markets.And the innovations were not enough (few to be honest...), such as the "accessible" electric ones from Mercedes (the concept CLA) and BMW (the Neue Class), both designed to offer greater electric autonomy with production costs almost halved, to reassure.On the contrary.There are those who, instead of fighting it, prefer to ally themselves with the "enemy", as Volkswagen which recently announced a partnership with China with the aim of reducing battery cell costs by 50 percent;a strategic choice given that the cost of a battery can influence the final price of an electric car by up to 40 percent.