Why global brands are fearing a Chinese EV revolution across the world

  • Chinese EVs are fast taking over global roads and global brands, many with decades of experience, are left crying foul.
BYD
File photo: A model stands near a BYD Seal electric car displayed during its launch event in Jakarta, Indonesia. (AP)
BYD
File photo: A model stands near a BYD Seal electric car displayed during its launch event in Jakarta, Indonesia.

Chinese electric vehicles (EVs) are affordable. Chinese EVs are mostly packed with features. And Chinese EVs are fast becoming increasingly reliable as well. And while China is the world's largest EV market, local companies are fast making their presence felt in markets abroad, much to the apparent displeasure of many global brands.

According to the European Commission, China-made EVs tend to be around one-fifth the price of EU (European Union)-made models. China's cost and supply chain advantages help EVs build here to be significantly cheaper than comparable models manufactured anywhere else. Little wonder then that non-Chinese EV players are feeling the heat. Even Tesla, the global leader in the electric car space.

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Tesla was overtaken by China's BYD in the last quarter of the previous calendar year, in terms of sales. But while Tesla has snatched the crown back for itself, the competition is enormously intense. A number of Chinese companies slashed prices of their offerings in the Chinese markets, prompting Tesla to follow suit.

But even in distant Europe, Chinese companies like BYD, Chery Auto and Nio - among others - are gradually becoming dominant players. Take Italy for instance. The government here recently confirmed that it is in talks with Tesla and Chery Auto for either one of the two to set up a manufacturing facility here. This prompted a sharp reaction from various quarters. “If someone wants to introduce Chinese competition, they would be responsible for the unpopular decisions that might have to be taken," Stellantis CEO Carlos Tavares was quoted as saying by Automotive News Europe, even warning of plant closures due to the possibility of losing market share. "Then we might not need so many plants as we have now," he said. "We are ready to battle, but in a battle there are casualties."

Spain is also trying to woo Chinese companies and government officials here are reportedly in talks with Chery Auto for a production base in the country. As a whole, Europe is expected to see over nine million EV sales each year by 2030 and Chinese companies, with their affordable offerings, are slotting themselves into strong positions to make the most of it.

BYD, meanwhile, has started shipping EVs to Europe by the thousands using massive cargo ships it owns directly. Chinese companies expect shipping charges to go up with more deliveries going from the mainland to Euorpe, prompting considerations of outright ownership of these ships.

BYD
China is poised to play a major role in EV transportation using massive car-carrying ships.
BYD
China is poised to play a major role in EV transportation using massive car-carrying ships.

The moot point though remains that global brands are finding it very hard to play the price game against Chinese opponents. Tesla has reportedly dropped plans of a sub-$25,000 EV, a decision seen by many as an admission it cannot match pricing of Chinese EVs.

European and American car companies want governments to intervene. The Inflation Reduction Act (IRA) from the Joe Biden administration in the US, for instance, allows subsidies on only those EVs that are assembled in North America. The EU is also set to impose extra tariffs on China-made EV imports.

China has blasted such moves. The country has accused the US of imposing trade barriers while it has rejected the EU probe into subsidies on China-made EVs. Wang Wantao, China's Commerce Minister, even said accusations that his government is aiding Chinese EV companies is ‘groundless.’

But times when Chinese products were considered inferior and sub-standard are long gone even if the lucrative pricing structures have remained. This is what is powering the EV game in most parts of the world, prompting automobile companies with decades of experience in a jittery state.

First Published Date: 11 Apr 2024, 10:56 AM IST
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