Daily Management Review

Electric Car Makers Of China Making Big Moves Into Europe


Electric Car Makers Of China Making Big Moves Into Europe
Electric car makers from China are swooping into Europe, seeking to catch conventional automakers off guard and capture a piece of a market fueled by the continent's push toward zero emissions.
Nio Inc, one of a tiny number of rivals, will unveil its ES8 electric SUV in Oslo on Thursday, marking the company's first venture outside of China, despite its $57 billion valuations.
Aiways, BYD's Tang, SAIC's MG, Dongfeng's VOYAH, and Great Wall's ORA are among the other brands that have begun or intend to begin selling automobiles in Europe and which are relatively unfamiliar for European customers.
However, Europe, a large, competitive automobile market dominated by well-known brands, has proven difficult for Chinese automakers in the past. They made strategic mistakes while simultaneously contending with the idea that China, long associated with low-cost mass production, could not compete on quality.
Indeed, Nio CEO William Li told Reuters that he expects a lengthy path to success in a mature sector where success is "extremely tough to come by."
According to the wealthy entrepreneur, Chinese carmakers may require up to a decade to "get a strong footing" in Europe, a prediction shared by He Xiaopeng, CEO of electric vehicle (EV) producer Xpeng,  who told Reuters his company needed 10 years "to establish a decent basis."
There is a window of opportunity to ultimately get into the lucrative industry, believes these new entrants, many of whom have only been engaged in producing electric vehicles in the past.
Last year, sales of electric cars had more than doubled in the European Union and recorded an increase of more than 130 per cent during the first half of this year. Yet, conventional auto companies are still transitioning their major vehicle ranges to electric models in a phased manner and have not yet flooded the market with a wide range of electric vehicle models even as there is inherent demand for green cars.
"The market is not that busy yet, if you compare it with combustion-engine models where each of the major carmakers has a whole range of vehicles," said Alexander Klose, who heads the foreign operations of Chinese electric vehicle maker Aiways.
"That is where we think we have an opportunity," he added on a drive around Munich in a U5, a crossover SUV on sale in Germany, the Netherlands Belgium, and France.
The starting price of the U5 is at 30,000 euros ($35,000) in Germany, which is less than the average new vehicle cost and most local EV pricing before factoring in 9,000 euros in EV subsidies and comes in only four colors and two trim levels to keep costs down.
As Chinese automakers prepare to enter Europe, they are experimenting with various business strategies, such as depending on imports, low-cost retail alternatives, or establishing more traditional dealerships.
The new reality that major Western carmakers such as BMW (BMWG.DE) and Tesla Inc now build automobiles in China's technical powerhouse has certainly weakened previous impressions of low quality craftsmanship - though they can be difficult to shake.