Editorial (free to read):
At the turn of the year in 2019, all eyes were on European passenger car makers and how they would achieve sharpened fleet average CO2 limits, increasing by over 20 per cent from one year to another (130g/km: 2019 to 95g/km: phase-in 2020). With European manufacturers holding back supply in 2019, hoping to flood the market from 2020 with back-orders, creating a sling-shot BEV momentum, Western OEMs left the door wide open to new market entrant Tesla. The Americans happily marched into the market in 2019, moving from niche (Model S/X), to a more serious company with the unchallenged 2019 Model 3 launch, resulting in them commanding 31% of the BEV market by the time the year had closed. Now, just a handful of years later, those same OEMs that have enabled Tesla to snap up 2 per cent of the total West European market by the close of this year (1.95% 12-month rolling to October), are in danger of history repeating itself, with lethargy punishable from the East this time.
During October, more new Chinese-branded pure electric cars entered West European roads than those coming from either South Korea or Japan, giving perhaps a foretaste of how things could develop. BEV models from the likes of SAIC's MG and Geely's Polestar, which combined accounted for nine-in-ten of the Chinese total, saw volumes accounted for 9,900 units or 8.4% of the total zero-emission new car market in October. Japanese and Korean models saw volumes reach just 4,500 and 9,500 units respectively. With Toyota only committing to a 10% BEV mix of their European sales mix by 2025 – although this can be "tweaked upwards", Toyota Europe's CEO Matt Harrison told this report. That would amount to around 100,000 units at the current market trajectory for Europe's second-largest passenger car brand. Combined Chinese OEMs should surpass that level already next year. During 2022 Chinese OEMs are expected to reach a combined BEV volume total of around 85,000 units (61,900 Oct YTD) which would amount to approximately 6 per mix of the BEV market. Sino-OEM West European total volumes across all drivetrains already reached 150,000 units during the opening 10-months, 92,000 of those being plug-ins (NEVs). Geely's Lynk&Co contributed 18,200 PHEVs alone, making its 01 model a top-10 West European PHEV this year. If Chinese-made models from foreign OEMs, such as Tesla, BMW and Renault Group's Dacia brand, are added to the equation, 0.3 million passenger cars manufactured in China ended up on W-European roads this year, accounting for almost 4% of total volumes. Needless to say, this will likely lead to a shortage in Ro-Ro ships, the workhorses of the sea. More Chinese models are waiting in the wings from the likes of Mercedes-Benz and Geely's Smart joint venture (#1 model), as well as three models from BYD and the same amount from NIO about to hit the market. The promising VW ID.3-sized MG 4 is also being rolled out, while Polestar's second Chinese-made model – Polestar 3 – will enter Europe next year.
Even Volkswagen Group are diverting Chinese production to Europe. A Bloomberg report, confirmed to this report by VW, stated that the world's second-largest passenger car manufacturer will begin exporting a Chinese-made MEB-based Cupra Tavascan SUV model to Europe in 2024. VW told this study that there are no plans to ship any further Group models to Europe.
Having been the sous-chef role to their Western counterparts in their domestic market for years as part of Chinese JV deals, it appears that Chinese OEMs are now confident enough to open their own establishments in their former mentor's backyard. Where China's patriotic domestic consumption habits have helped the likes of BYD claim the title as the world's largest NEV (PHEV/BEV), the likes of the Berkshire Hathaway-backed company are now looking to exploit some of those early scaling benefits elsewhere. Shipping capacity could potentially cause hiccups. Media reports suggest SAIC and BYD are keen on ordering more of their own freight transporters, underlining their intent. Hyundai (Hyundai GLOVIS) and Toyota (Toyofuji Shipping Co) already have their own shipping companies. Judging by a recent two-week test in a Chinese model – Aiways U5 (see page 17) – the products arriving from the Far-East are on par or almost, in some cases, above Europeans when it comes to the interior finish. To stay ahead of the invasion, century-old incumbents must use their knowledge to innovate further and quicker to remain ahead. The winner here is the customer. If established OEMs can't take the heat, they may be forced to leave the kitchen!
More in-depth reporting in the full study published each month. The study now also features an in-depth look at the Chinese OEMs as their European expansion slowly begins. Are Chinese OEMs really a threat to the established European OEMs and what does the outlook look like?
May also interest you: European Electric Car Market Full Year 2021: Executive Summary – Full Year 2021 European Electric Car Study click here for the story
*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK