Chinese EV makers prepare for European market expansion

Nio plans to begin shipping its electric vehicles to Europe in May, with competitor XPeng already shipping the first 300 electric vehicles to Norway. Analysts predict Europe will become the second largest electric vehicle market in the world, after China, where competition is heating up.

Growth of the electric vehicle market in Europe – potential for Chinese automakers

The market for electric vehicles in Europe showed incredible growth in the crisis year of 2020, while sales of cars with internal combustion engines fell sharply. Electric vehicle sales in Europe in the last quarter of 2020, according to analyst firms, even surpassed sales in China, the largest electric vehicle market in the world today.

According to research group, the real boom of electric vehicles in Europe began in June and July 2020 and peaked in December, when almost 285,000 vehicles were sold.

While the Chinese market is already highly competitive, many European automakers have just begun the transition from ICE models to electric vehicles. Chinese automakers can take advantage of this time to gain share of the fast-growing European market.

Cui Dongshu, Secretary General of the China Passenger Car Association, told the Global Times, “As the EU continues to aggressively pursue its goal of green mobility, markets need more qualified players to participate in the transition, and the exit of Chinese automakers also will help stimulate the viability of the local industry. “

The EU Commission announced in its program that by 2030 there should be at least 30 million zero-emission vehicles and 80,000 clean energy trucks on Europe’s roads.

Norway is the first country in the world where electric vehicles have more than half of the market share

According to the Norwegian Road Federation, the market share of electric vehicles in Norway increased to 54% in 2020 from 42% in the previous year.

Therefore, it should come as no surprise that Norway became the first European country to which Chinese carmaker XPeng Motor (XPEV) shipped the first batches of its G3 electric SUVs: 100 units in December and 200 units in February.

NIO (NIO) will begin shipping its electric vehicles to European customers as early as next month, according to the South China Morning Post. And the first European country to supply NIO will also be

Norway. Local media outlet Bilbransje24, citing Marius Heiler, CEO of NIO Norway, says the company will open a showroom in a northern European country this September.

At the same time, the management of NIO says that the company has no immediate plans to establish production facilities in Europe.

Analysts note that NIO, XPeng, Li Auto (LI) in their expansion into new consumer markets can help attract investment and enter the stock markets. Thus, wrote that Nio, Xpeng and Li Auto are preparing to raise funds by holding an IPO in Hong Kong.

Europe – the start of the conquest

At the moment, we have begun the expansion of Chinese electric vehicle manufacturers to Europe.

In 2019, Aiways became the first Chinese electric vehicle manufacturer to export its U5 SUVs to Europe. Aiways began receiving commercial orders from April 2020 and is currently supplying Aiways U5 to France, Germany, the Netherlands, Belgium and other European countries.

Another Chinese brand, SAIC MAXUS, achieved cumulative sales of 10,000 units as of October last year, successfully entering nine European markets, including the UK, Ireland, Norway, Spain, the Netherlands and Belgium. SAIC’s customers in Europe are companies from industries such as retail, post office, supermarkets and the municipal sector.

According to a study by Berlin-based Schmidt Automotive Research, total sales of Chinese brands of electric vehicles in 18 major European car markets last year amounted to 23,836 units, more than 13 times more than in 2019, with a market share of 3. 3%, which indicates a fast development phase.

European consumers should benefit as, in addition to expanding the range, prices for electric vehicles in Europe should be cheaper as manufacturers compete.

Fu Qiang, Founder and Chairman of Aiways, told the Global Times that he sees potential for Chinese carmakers in the European electric vehicle market, in part because European consumers will not abandon the products initially produced by the new brand just because of low awareness. brand.

“European users will not adhere to strict selection criteria other than Chinese users who usually admire big brands,” says Fu Qiang.

Competition Challenges and Risks for Chinese Automakers in Europe

Tesla, a global electric vehicle sales leader (TSLA), is building a plant in Berlin to strengthen its competitive position in the European market.

Data for January-February 2021 on sales of electric vehicles in major European markets, including Norway, showed that Tesla vehicles lost the lead and the German Volkswagen ID 3 model took first place.

The difficulties of competition in the European market for automakers, whose factories do not exist in Europe, include the lack of subsidies and benefits that local manufacturers who create jobs receive.

In addition, there are risks in the field of marketing, the difference in the peculiarities of the mentality can make sales difficult.

Industry expert Tu T. Le, Founder and Managing Director of Sino Auto Insights, said: “Europe, like Southeast Asia, is very diverse and therefore marketing strategy in Germany may not work in France and Italy. The challenge for EV makers is increasing significantly, and high marketing costs can hit their capital. ”

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