Nio plans to begin delivery of its ET7 electric sedan in 2022.
Evelyn Cheng | CNBC
SHANGHAI – After the last year of growth in the world’s largest car market, Chinese electric car companies are stepping up plans to tackle Europe.
Chinese authorities have only begun to push back restrictions on full foreign ownership of local car production in recent years. But more than a decade ago, Beijing began spending billions of dollars on developing its own electric vehicles.
This has helped local players gain an edge in the production of battery cars that they now want to sell abroad. Analysts at Goldman Sachs predict that new government policies over four years will mean that electric cars will account for a larger share of car sales in Europe and the US, compared to China, although it is the largest market.
The US-listed Nio said it would enter Europe in the second half of this year. Lihong Qin, co-founder and president, said on Monday that the company expects to make an official announcement about such an expansion within a month.
He did not name a specific country, while saying that Nio to Europe still intends to enter the US market.
Amid tensions with the US and efforts to conclude an investment agreement with Europe, China exported 63,500 pure electric vehicles with batteries during the first eleven months of last year, according to a report from the Chamber of Commerce for Imports and export of machinery in January. and electronic products. While Saudi Arabia and Egypt were the top destinations for Chinese cars last year, the report saw significant growth in vehicle exports to the UK, Belgium and Germany.
The US-listed Xpeng is already testing the waters in Norway, where the company delivered 100 units of its G3 electric sports utility vehicle in December.
Later this year, Xpeng hopes to see how customers in Northern Europe respond to its P7 electric sedan, said He Xiaopeng, chairman and CEO. He is recruiting new staff and plans to set up a business in the region before looking at Western and Eastern Europe.
Another Chinese electric car, Aiways, said it had exported more than 1,000 vehicles to Israel and Europe in the first three months of this year.
“It’s no secret now that most of China’s EV startups have global ambitions,” said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights. “This will continue as these companies grow and pursue value and see opportunity due to the lack of viable EV products in the region.”
He said that with enough local research, some of the Chinese companies in Europe could succeed.
However, any growth in sales of Chinese electric cars to Europe remains a small fraction of the market.
According to the European Motor Manufacturers Association, China accounted for less than 2% of EU passenger car imports in 2019, and the value of 865 million euros was 79% higher than in the previous year.
In contrast, EU-owned carmakers made nearly 6 million passenger vehicles in China in 2018, accounting for nearly a quarter of total Chinese car production.
Increasing competition within China
The Chinese companies’ overseas business starts when the market heats up at home. Nio’s Qin said the entry of technology companies like Apple and Huawei into the industry is creating fierce competition for the automaker.
On the car front, Tesla leads the market and increases local production. The Model 3 was the best-selling car in China last year, according to the China Passenger Car Association.
With the exception of two mini-electric motors, the association said the next top-selling vehicle in the category is the S model of Aion, a new energy brand exploited by Chinese state-owned automaker GAC. A more expensive model from Nio was ninth, while Xpeng did not make the top ten list.
“Chinese consumers are understanding more and more new energy vehicles,” said Qiu Liangping, director of Aion’s planning division, according to a CNBC translation of his remarks in Mandarin. In addition to the convenience of the battery, he said Chinese buyers are looking for a better driving experience than that of fossil fuel cars and internet-powered features.
The brand also has its eye on the international market, Qiu said. Prior to the playoffs, Aion and Trump’s brand Trumpchi had already sold cars in Israel, the Middle East and South America.
As the automotive industry continues to switch to electric power, traditional American and German automotive companies are introducing their own electric vehicles – many in the Chinese market.
General Motors’ Cadillac brand, for example, unveiled its Lyriq electric car at the Shanghai Motor Show, with pre-orders in China starting later this year, according to the company.
Ford also used the show to unveil its locally-produced version of the Mustang Mach-e electric car, as well as a largely China-developed Evos SUV that will be available in the country only.
Volkswagen has unveiled a third electric car for China, the ID.6, in Shanghai. The German carmaker aims to have at least 70% of its cars sold electrically in Europe by 2030, and at least 50% for cars sold in North America and China.