China’s Electric Car Assault On Europe Is Sputtering For Now

If European carmakers are worried sick the long-expected onslaught from Chinese manufacturers might come in the burgeoning electric sector they can relax, for the time being.

Analysts expect some attempts from Chinese companies to sell electric cars in Europe, but it won’t add up to much for a few years yet.  

China’s latest mass market battery electric vehicle (BEV) candidate is the MG ZS EV, which is priced aggressively. A Chinese MG you ask? SAIC Motor of China acquired the brand name in 2007 and is badging its made-in-China vehicles for sale in Europe with this famous nametag.

According to the International Energy Agency, China is the world’s largest BEV market, with 2.3 million electric vehicles in active use. That’s nearly half, 45%, of the global stock of BEVs, the IEA says. Investment researcher Jefferies data shows China was the biggest market for BEVs in 2019, with 830,000 sold, compared with 365,000 in the European Union and 272,000 in the U.S. and Canada.

The fact China is a biggest BEV market might be Europe’s saviour for the time being because most of its manufacturers are busily trying to satisfy local demand.

The China assault in Europe is getting under way at a low level. Volvo, owned by China’s Zhejiang Geely Holding, is busy electrifying. Geely also owns the Polestar electric, and Lynk brands.

Professor Stefan Bratzel of Germany’s Center of Automotive Management (CAM) doesn’t think China’s market share in Europe for electric vehicles will reach up to 3 or 4% by 2025.

French automotive consultancy Inovev said the MG ZS EV will likely only sell between 7,000 and 10,000 a year in the EU, based on sales in the first 5 months of 2020. MG hasn’t made a public forecast.

“Priced at €30,000 after tax ($35,000) it (the MG ZS EV) is cheaper than a Renault Zoe (€32,000) or a Peugeot e-208 (€32,000) and a direct competitor, the Peugeot e-2008 (€37,000),” Inovev said in a report.

The Renault Zoe and Peugeot e-208 are little city cars, while the e-2008 is a compact SUV.  

“The MG ZS electric allows an autonomy of 263 kilometers, according to the WLTP cycle, on a par with the 300 kilometers of its French competitors,” Inovev said.

WLTP refers to official range data. That might well reflect town and urban driving capability, but my own testing shows highway cruising range to be only 101.9 miles for the MG, and about 85 miles for the Peugeot e-208, which is the same vehicle as the Vauxhall and Opel Corse-E with a different badge.

IHS Markit
INFO
analyst Ian Fletcher doesn’t see much danger for the Europeans from Chinese electric vehicle activity but sees some stirrings between now and 2025.

“There are BEV imports from China to the EU, but the majority of volumes do not come from new Chinese brands. However, we do see Zhejiang Geely Holding being instrumental through Polestar and its joint venture with Daimler on (Mercedes’) Smart. Another key BEV export from China to the EU will be a variant of the Renault K-ZE built under a joint venture with Dongfeng that will be sold under the Dacia brand as the Spring which has already been seen as a concept,” Fletcher said.

Dacia is Renault’s subsidiary originally charged with selling obsolete (in the West) and therefore cheap vehicles to the third world. But when value-seeking westerners found out about this, they created a big new demand for these cars and SUVs in Europe.

“As for the Chinese brands bringing BEV to EU, our forecast suggests that these are expected to arrive in very low numbers. In fact, the biggest volume is likely to be SAIC with MG,” Fletcher said.

Will there be a market for cheap and cheerful electric vehicles designed for limited shopping, school runs and local commuting, like the Citroen Ami 1, and the Hong Guang MINI EV, a two-door micro electric vehicle launched by a joint venture between General Motors
GM
and SAIC? The latter vehicle sells for about $4,100 after tax.

Fletcher doesn’t think so and agrees that big demand at home will likely be their obsession for a while yet.

“The closest to this (micro electric vehicle) is probably the Smart and the Dacia. The volumes will also be based on the fact that both brands have a legacy and a dealer network in the region, which is something that any newcomer into would have to overcome. There is also huge pressure to bring on BEVs in the Chinese domestic market where BEV share is expected to grow significantly, that it makes sense that local (manufacturers) should concentrate there, particularly if they already have a significant footprint,” Fletcher said.

CAM’s Bratzel said it will be difficult for Chinese companies to compete in Europe because of the expense of setting up new dealer networks and scepticism about their products. Micro electric vehicles can only command thin profit margins, so there’s little incentive to open up a new market with these vehicles.

“I think it will be hard for the Chinese. I don’t think they will be much cheaper than Europeans and I’m not sure they would have a unique selling point. After all the cost of the batteries is most important and costs per kWh would be quite similar (to European vehicles),” Bratzel said.

There might be a market for low cost electric cars like Citroen Ami 1, but only if the charging network was strong enough.

“Cheap electric cars, maybe with a range of 150 kilometers (94 miles) could be an interesting segment in the longer term (in Europe) when the charging infrastructure is well developed but I’m not sure a manufacturer could do this with one model. It would have to be part of a product family I think,” Bratzel said.

 

   

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