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LONDON, 24 August 2023: The Electric Vehicle (EV) revolution led by China is poised to make waves in Europe. A recent report by ABI Research indicates that the European Union (EU) is projected to import a staggering 1.2 million Battery Electric Vehicles (BEVs) from China by 2030, constituting 12% of the EU’s BEV sales.
Chinese Brands Sweep Europe with EV Models
Renowned Chinese automakers including BYD, XPENG, and NIO are set to introduce their models to the European market in 2023. This strategic move is giving established Western automakers reasons to both feel threatened and explore opportunities. According to Dylan Khoo, an Industry Analyst at ABI Research, Chinese disruptors boast an advantage due to their seasoned expertise and unwavering focus on EVs. Their offerings align with European preferences, featuring competitive pricing and quality across diverse vehicle segments. Brands like MG and Polestar, under Chinese ownership, have already gained traction in the market, with their China-imported models witnessing robust sales.
Shift in Trade Dynamics
Over the past five years, EU car exports to China have marginally declined, while imports of Chinese vehicles by the EU have surged fourfold, effectively reversing the trade flow. Notably, China secured its position as the primary source of imported cars for the EU in 2022. Despite this, Chinese imports accounted for less than 6% of the total vehicles registered that year. However, an astonishing 28% of the EU’s BEVs were sourced from China.
Western Automakers Ride China’s Export Tide
Contrary to popular perception, Chinese brands did not dominate the segment of imported EVs. Western automakers have started utilizing China as an export hub, capitalizing on the local supply chain advantages and the vast demand pool. For instance, Tesla has effectively executed this strategy, exporting 40% of its Giga Shanghai factory-produced vehicles, thereby supplying 80% of Europe’s Teslas. BMW exclusively manufactures the iX3 in China for both local sales and global export. The Dacia Spring, a product of Renault and Dongfeng’s collaboration in China, ranks among Europe’s best-selling cars.
Market Disruption and Supply Chain Challenges
China’s automotive landscape, characterized by overcapacity and domestic market competitiveness, is nudging Chinese Original Equipment Manufacturers (OEMs) toward overseas expansion. The European market emerges as an alluring prospect due to high EV demand and relatively fewer trade barriers. This influx of Chinese brands into Europe and Western OEMs establishing production capacity in China for European exports are set to disrupt the European automotive supply chain, introducing shifts from both directions.
Dylan Khoo concludes, “The European automotive supply chain will be disrupted from two directions: these Chinese brands pushing into Europe, and Western OEMs building production capacity in China for export to Europe.”
Insights from ABI Research’s Analysis
The insights discussed stem from ABI Research’s comprehensive analysis of Chinese Electric Vehicle OEMs. This analysis is a component of the company’s broader Electric Vehicles research service, encompassing meticulous research, data, and actionable ABI Insights. Drawing on extensive primary interviews, the Application Analysis reports present in-depth evaluations of crucial market trends and factors within specific technological domains.
