Chinese EV companies on war path. What it may mean for global auto brands
- As the Chinese economy slows down, local EV brands are looking to branch out to foreign shores. But what does it mean for global brands here?
For long, global automotive brands have tried to seduce Chinese customers to buy their products. China is the world's largest automotive market - both in terms of production as well as sales - with international companies engaged with one another and numerous local companies for a fair share of the lucrative pie. And with the advent of electric vehicles or EVs, the competition has become even more fierce. But this fierce competition isn't just confined to Chinese borders as local companies here have now embarked on a path of conquest of foreign markets. The battle is on indeed.
Affordability is a massive factor in many key automotive markets across the world. But when it comes to EVs, offering pocket-friendly options is just one of many crucial factors. The technology, battery, range, features and the likes are every bit as crucial and make the task of offering affordable models rather tough. But this is also something that Chinese brands like BYD, Xpeng and NIO are fast perfecting. As such, many of these brands are able to sell EVs in Europe that are cheaper than those from European brands. “The Chinese offensive is possibly the biggest risk that companies like Tesla and ourselves are facing right now," Stellantis CEO Carlos Tavares recently said. “We have to work very, very hard to make sure that we bring out consumers better offerings than the Chinese."
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Is China the new Japan in the world of EVs?
Once upon a time, Japanese brands were the holy grail in the world of automobiles. The likes of Toyota, Nissan and Honda are still revered for the reliability that many of their models offer. But while Japanese automotive brands transcended many global markets in decades gone by, many feel it is now time for Chinese brands to do the same with EVs. Tavares himself sees it happening. “Do we want that the Chinese carmakers take a significant share of the US market in the next 20 years, or the next 10 years? I don’t know. That is the question. So how do we prevent that from happening beyond all the protectionist decisions, which are out of my reach? Well, by making our consumers happy," he said.
But how does the discerning new-generation of car buyers find happiness with a brand? Brand loyalty will take time but the younger buyer in most markets are also more willing to experiment with new companies and their products if they see value and an aspirational aspect attached. It is something that companies like BYD may be relying upon.
Selling like hotcakes. But where?
BYD recently overtook Tesla as the world's largest EV seller. This is also significant because while Tesla makes EVs only, BYD also manufactures hybrids and plug-in hybrids. At present, BYD and Tesla combined have a 35 per cent share in the global EV market.
By even Elon Musk's own admission. Chinese EV makers are poised to push forward in top gear. "If there are no trade barriers established, they will pretty much demolish most other car companies in the world," The Tesla CEO said recently. "They're extremely good."
But while Chinese companies look to ace their game in global markets, the outlook back home isn't all that great. The Chinese economy is slowing and EV sales in January were lower than in the month of December of 2023. This will hurt global brands within the country too but it is just that local brands will feel the pain more. The possible solution? Tap into global markets with even more vigour and this is precisely why brands like Tesla, Stellantis, Volkswagen and even Ford will possibly feel increased heat.
