Chinese EV expansion in Europe surges

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【Summary】Chinese electric vehicle (EV) manufacturers are increasing their export to Europe, surpassing European manufacturers in the EV market. Chinese brands such as BYD, XPENG, and NIO are joining MG and Polestar in importing their EVs into Europe. It is projected that the European Union will import 1.2 million Chinese-manufactured EVs by 2030. Chinese companies currently hold a 56% market share in battery manufacturing and have a competitive advantage in price and quality.

FutureCar Staff Aug 24, 2023 6:15 AM PT

The Chinese electric vehicle (EV) industry is making significant strides in Europe, with Chinese manufacturers exporting EVs to the continent at an increasing rate. Brands such as BYD, XPENG, NIO, MG, and Polestar are all contributing to the growing import of Chinese EVs in Europe.

A report published by ABI Research in July 2023 predicts that the European Union (EU) will import around 1.2 million Chinese-manufactured battery electric vehicles (BEVs) by 2030. This highlights the strong focus and commitment of China towards its EV industry.

In China, BEVs already account for 24% of all car sales as of May 2023. With Chinese companies holding a significant 56% market share in battery manufacturing, their influence on the industry is expected to continue to grow.

Dylan Khoo, an Industry Analyst at ABI Research, believes that Chinese BEVs will be increasingly imported into Europe due to the experience and focus of Chinese manufacturers in the EV space. These Chinese brands offer competitive pricing and quality across various segments, making them attractive to European customers.

The Chinese push into Europe has also resulted in a reversal of the trade flow in car imports and exports. Since 2018, exports of European cars to China have slightly declined, while the import of Chinese cars into the EU has grown nearly fourfold. China has now become the largest importer of cars into the EU, with 28% of its BEVs originating from China.

Despite this, Western auto manufacturers still utilize China as an exporting base, producing cars and parts in overseas factories before importing them back into the EU. For example, Tesla's Giga Shanghai factory exports 40% of the cars it produces, accounting for 80% of Teslas in Europe. BMW also exclusively manufactures its iX3 model in China for sales both locally and in Europe.

According to Dylan Khoo, the motivation for Chinese OEMs to expand into Europe stems from overcapacity, economic slowdown, and intense competition in the domestic automotive market. Europe presents a lucrative market with high demand for EVs and fewer protectionist measures.

The entry of Chinese brands into Europe, alongside Western OEMs building production capacity in China for export to Europe, will disrupt the European automotive supply chain from both directions.

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