Updated: Sep 12, 2022
5.2 per cent of all new West European BEV passenger car registrations during the opening 7-months 2022 were from Chinese OEMs (3.8% Jan-Jul 2021).
On a 12-month rolling basis Chinese OEMs accounted for just under 5 per cent of the West European new BEV passenger car market
Dominated by just two OEMs – Geely's Polestar and SAIC's MG brand accounted for just under nine-in-ten (88.5%) of all Chinese BEV volumes registered in Western Europe during the opening 7-months of 2022.
Disappointing start from Chinese premium brands in Norwegian test market as Nio/XPeng struggle to make an impression. Nio's European CEO exclusively told the European Electric Car Study that numbers are on target and should be compared to German premiums.
While Chinese premium brands may be struggling so far according to Norwegian data, the volume segments could be more of a strategic target for Chinese brands according to the European Electric Car Study. Aiways have confirmed 10,000 European orders while, Great Wall Motors is about to roll-out its Ora brand, using established dealer groups, such as Emil-Frey, for their distribution networks. German premiums continue to take a take a top-down approach regarding their EV roll-out – helping them remain profitable – while they continue to limit their volume-segment offerings leaving more affordable segments open to new market entrants.
Chinese OEMs potentially have two windows of opportunity to enter the European market; with one before the 2025 EU CO2 fleet emissions target cut (-15%) leaving traditional OEMs continuing to push ICEs up until then – and likely unable to procure enough EV components even if the market required – to help finance their BEV transition, while the likely Euro 7 exhaust gas regulations expected in 2027 for new models will spark a switch from high volume traditional OEMs from ICE to BEV almost overnight.
Coinciding with the year of the tiger, Chinese OEMs, once having been the butt of all automotive jokes following failed crash tests and poor quality standards, now feel confident enough to give it another shot with a fully-charged line-up. The class of 2022 is almost unrecognisable from those models arriving 15 years ago. Sixty percent of the sino-models arriving at European ports are either BEVs or PHEVs (57,500 new Western European registrations July YTD out of 94,900). Another change is the transit to Europe. No longer are the models sharing ships packed full of cheap electronic goods and plastic children's toys, but are safely secured in dedicated roll-on/roll-off vessels next to the likes of BMWs (iX3) Teslas and Volvos, all made in the world's second-largest economy per GDP. Add those Western models to the equation (as well as the Dacia Spring) and close to 0.5 million Chinese-made cars are expected to enter European roads this year. European Automobile Manufacturers' Association (ACEA) data suggests that it would double the amount that arrived during 2020 (196,883 vehicles). It would also mean that 2022 may be the first year a balance of payments trade deficit with China, in terms of FBU vehicle movements, will be achieved with 2016 - 2020 all-seeing EU exports to China remaining just below 0.5mn units.
0.2 million passenger car models across all drivetrains will likely arrive in Europe this year from Chinese OEMs. Between 80,000 and 90,000 are expected to be pure EV and around 40,000 PHEV with the remaining conventionally powered. Due to that blip on the radar finally showing some movement, we have included a new page dedicated to their progress (page 6 of the study). Alongside the Chinese brands, over 100,000 BEVs have arrived from Chinese shores this year with Western badges on, from the likes of Tesla (ModelY/3), Dacia (Spring) and BMW (iX3), emphasising the confidence the West now has in Chinese manufacturing. From A(iways) to Z(hidou) A further 94,600 arrived with Chinese brand badges adorning the vehicles spread over almost 20 brands, from Aiways to Zhidou. Looking at BEV volumes in more detail the likes of SAIC's MG brand and Geely's Polestar accounted for 33,300 of the 37,000 Chinese BEV brand models delivered during the opening 7-months. Brands such as BYD, Great Wall Motors Ora (BEV) and WEY (PHEV) are looking to increase those ship movements between the two continents during the second half of this year. Both have announced market entries in the European arena, with BYD presenting a strategic outlook in The Netherlands during August. Geely's JVs also about to snap
Geely's JVs Smart and Lotus will be next on that export ship list. A spokesperson for SAIC's MG told this report that the Shanghai COVID-related shutdown headwinds during the first half of the year are no longer having an impact and the second half of the year is likely to be more plain sailing than the turbulent seas experienced during the first half.
Having built scale and procurement relationships with key suppliers in a booming domestic BEV market – twice the size of the West European market (see below) – those scaling cost benefits are likely to give the Chinese an initial price advantage. The ability to provide more supply to the region, operating in a supply-constrained market currently, could be key. A window of opportunity is present before the new CO2 fleet targets enter into force from 2025 and will likely see incumbents boost supply again. Different retail strategies at play between volume and premium brands?
European retail and service networks are being established through large dealer groups already present in Europe, such as Emil Frey's deal with Great Wall Motors, to distribute and service Ora's new models. BYD, which will initially launch three models (two SUV/Crossovers and one saloon) has teamed up with Hedin Mobility Group, among others, to distribute its vehicles.
While opportunities to break into the volume segments remain, the likes of more premium orientated brands such as Nio and XPeng may have a more challenging time. The likes of BMW, Audi, Porsche, and Mercedes are all about to begin their true BEV-dedicated platform pushes to meet those next CO2 fleet standards.
Thanks to the likes of MG and BYD, rather than Nio and XPeng, the Chinese silent purr could
turn into more of a roar.
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