The European electric vehicle (EV) market is experiencing a substantial surge, with sales increasing by a remarkable 55% during the first seven months of 2023. Approximately 820,000 EVs have been sold, constituting an impressive 13% of total car sales in the region. This rapid growth hasn’t gone unnoticed by Chinese EV manufacturers, who are setting their sights on Europe’s burgeoning EV market.
Prominent Chinese companies, including BYD, Nio, and Xpeng, are strategically expanding their presence in Europe. Xpeng, for instance, is planning further market expansion in 2024, while Zhejiang Leapmotor Technology has recently announced the launch of five new EV models for overseas markets, with a keen focus on Europe.
Data from auto consultancy Inovev underscores the success of Chinese EV brands in Europe. In 2023, these companies have captured a significant 8% share of the European EV market, a notable increase from 6% in 2022 and 4% in 2021. This growing presence of Chinese EV manufacturers has prompted concerns within the German automotive industry.
Hildegard Mueller, the president of the German Association of the Automotive Industry, has expressed apprehensions that Germany is losing its competitive edge in the EV market. She emphasized the urgent need for substantial investments in electrification to bolster the country’s position.
One of the key advantages held by Chinese EVs is their competitive pricing. In the first half of 2022, the average cost of an EV in China was less than €32,000 ($35,000), a considerable contrast to the approximate €56,000 price tag in Europe. European automakers are actively addressing this pricing gap by making concerted efforts to reduce production costs and enhance range and efficiency.
To level the playing field, established European automakers like Mercedes-Benz and BMW are launching new models with cost-efficiency in mind. Volkswagen is taking a different approach by aiming to slash battery cell costs by a substantial 50% through collaborations with Chinese partners.
Xpeng President Brian Gu acknowledged that European automakers currently lag behind their Chinese counterparts in the EV market. He highlighted the significant commitments made by European car manufacturers to EVs through partnerships and technology investments. Gu also emphasized that Chinese companies excel in battery production, a critical aspect where costs can constitute up to 40% of an EV’s total cost.
Auto industry analyst Ferdinand Dudenhoeffer has underlined the importance of Chinese battery manufacturers establishing a presence in Germany to help reduce EV costs. He cautioned against strategies that might deter these companies, stressing the necessity of cooperation between Chinese battery firms and German policymakers.
The aggressive expansion of Chinese EV makers in Europe has intensified competition in the EV market. European automakers are responding by enhancing their offerings and reducing costs to remain competitive. As both Chinese and European manufacturers vie for dominance in this rapidly evolving sector, the future of the European EV market is poised to witness increased rivalry between the two.