As much as I agree, I think having Chinese EV on the Aus market keeps the price down for other brands.
There are fields of unsold EVs parked and fading in the Chinese sun.
China wants to flood the world with its electric cars
After conquering the national market, Chinese manufacturers intend to increase exports.
“New era, new car”: the eighteenth edition of the China International Automobile Exhibition opened on April 25 in Beijing and Chinese companies that produce electric cars are keen to show their models there.
The China Association of Automobile Manufacturers (CAAM) indicates that, of the approximately 336 million vehicles on China's roads, more than 6% – or around 20 million – are electric cars, buses and trucks.
The Chinese market also represented, in December 2023, 69% of global sales of this type of vehicle.
Chinese industry is showing its technical capabilities in the field of electric cars, where it has taken undeniable leadership in just a few years. Its objective now is to develop sales of these vehicles in as many countries as possible around the world.
A transformed automotive landscape
Around fifty years ago, half of the avenues of large Chinese cities were reserved for crowds of cyclists.
The horns of the few cars could be heard on the remaining part of the road.
Then, in the early 1990s, car traffic grew and quickly occupied almost all of the streets.
Many Chinese automobile companies then developed, the most important being Dongfeng, FAW (First Automobile Works), Chang'an Automobile, and SAIC (Shanghai Automotive Industry Corporation).
The vehicles produced were poorly efficient and the export structures to sell them outside China did not exist.
Chinese leaders therefore considered that cars manufactured in China were not able to compete with Western, Japanese or Korean brands, which sold their gasoline vehicles to the four corners of the planet.
During political meetings in Beijing, the parking lots of the National People's Congress were filled with Mercedes, BMWs and Audis, waiting for the representatives of the Chinese people.
Over the past three or four years, the Chinese automotive landscape has changed greatly.
To produce electric cars, Chinese manufacturers have a major advantage: for forty years, their country has managed to dominate most of the sector of rare earths and metals which are used to operate electric batteries.
Everything from the ore refining to the engine manufacturing plant is available in China.
The cars produced are almost all equipped with lithium-iron-phosphate batteries, a technology that does not cost very much and does not require cobalt. But they are heavy and difficult to recycle.
Result: there are nearly 130 electric car manufacturers in China.
There were around 500 in 2019, but many produced models of average quality, and others were eliminated by the fierce price war plaguing this rapidly evolving sector.
Today, around twenty groups have succeeded, through the quality of design of their cars and the low prices at which they sell them in China, in overcoming this competition.
In the eight huge halls of the Chinese Motor Show, where 1,500 exhibitors are held and where 800,000 visitors are expected until May 4, Chinese brands manufacturing electric cars are highlighted and take the spotlight.
The shifts of Chinese companies
Originally, most Chinese electric car manufacturers were engaged in another business.
Xiaomi, for example, which mainly manufactures smartphones, launched the production of the Speed Ultra 7 on March 28.
The price of this electric car will be around 28,000 euros, while its bodywork closely resembles that of the Taycan, electric version of the Porsche Panamera, which costs around 90,000 euros.
Xiaomi CEO Lei Jun announced that the Speed Ultra 7 had a range of 800 kilometers and that its acceleration was higher than that of models from the American company Tesla, which is headed by billionaire Elon Musk.
He is currently visiting China to meet Chinese international trade officials in order, national media explain, to “discuss next steps in terms of cooperation and other matters”.
Currently, the leader in electric cars in China is called BYD: its sales represent more than a third of the Chinese market.
The Chinese name of the company, Bǐyàdí Qìchē, was, for export purposes, transformed into BYD, the initials of “build your dreams”.
It was originally a simple battery factory, founded in 1995 in Shenzhen, a large city near Hong Kong that has become the headquarters of numerous technology groups.
BYD has developed a whole range ranging from cars to trucks and taxis to buses.
The K9 electric bus, in particular, has been purchased by many cities around the world.
The company's plan is now to expand in Europe, attempting to sell 300,000 electric cars there this year.
BYD models are the majority in the large quantities of Chinese electric cars that cargo ships have been bringing into the port of Antwerp for several months and which are waiting to be sold.
Several other Chinese electric car companies are also targeting exports.
In 2023, MG, which was originally born from the acquisition of a once-renowned English brand, has sold more than 20,000 copies of its MG4 in France alone.
Furthermore, Geely, which acquired ownership from Volvo in 2010, offers an electric crossover, the Zeekr 001, which is a high-end, 5-meter-long elevated station wagon.
Most of the gains that will provide all these Chinese companies from vehicle sales abroad currently seem to be intended to be reinvested in China, particularly in research and technological improvements.
Government helping hands
In Beijing, the government is closely monitoring the development of electric cars in China and regularly provides assistance to the sector.
For around ten years, buyers have benefited from tax exemptions and, since June 2023, tax reductions.
Purchase coupons are also distributed to those who decide to purchase an electric car.
On the other hand, the Chinese state grants, even if the amount has decreased, all kinds of financial aid to manufacturers.
The fact that many of the small builders who went bankrupt had previously pocketed public money seems to be seen as a secondary disadvantage.
The important thing, seen from Beijing, is to solidify the economic position of Chinese manufacturers.
Also, in Chinese provinces where electric cars are produced, central government aid is supplemented by local governments.
The purpose of all this financing is in particular to help Chinese manufacturers of electric cars to be in a strong position for export.
The commercial offensive launched by China regarding electric automobiles seems to have taken Western brands by surprise.
For more than forty years, their approach was to settle in China to produce and sell their cars there.
The procedure consisted of creating a joint venture, in which a Chinese company had the majority.
This is how Honda partnered with Dongfeng, like Nissan or Peugeot-Citroën, Ford with Chang'an, or even, from 1984, Volkswagen with SAIC.
However, since 2017, the Chinese government has changed the regulations: in the automotive sector, foreign companies no longer need to partner with a Chinese firm and can therefore have full ownership of their factories.
Immediately, the American company Tesla opened a company in Shanghai.
How to slow down the movement?
But today, the movement of sales goes from China to the West and European manufacturers hardly have battery supply chains.
A large number of them would have to be built quickly so that Europe can have real autonomy while, for the moment, the technologies and the price of batteries produced in China are very efficient.
According to Transport and Environment, 25% of electric cars circulating in Europe are already Chinese brands.
This international association, which campaigns for carbon-free transport, believes that a sharp increase in customs duties on these vehicles from China would favor European production.
Significantly increasing taxes on electric cars would, however, be part of a logic of economic protectionism which is not in line with the logic of the European Union and which, moreover, would probably lead to Chinese commercial retaliation.
At the end of 2023, the European Commission announced that it suspected Chinese automobile brands of unfair competition.
The Chinese government is reportedly providing significant subsidies to the electric vehicle sector.
In Beijing, the Ministry of Commerce responded by declaring that this investigation was likely to “violate the rules of the World Trade Organization (WTO) and the laws of the European Union”.
The European Commission's investigation continues.
The United States is much more determined than Europe to counter Chinese commercial expansionism, and therefore to block the sale of Chinese automobiles on their territory.
They have imposed considerable tariffs on Chinese vehicles.
This explains why Chinese manufacturers are now devoting their sales efforts to European markets.
BYD exports no fewer than eight models to Europe, while waiting to build a factory in Hungary.
The American Tesla, for its part, reacted by lowering the prices of its electric cars in Europe.
China can all the more seek to export its electric cars as its economy is experiencing a slowdown.
The end of the vast confinement, enacted from 2020 to 2022 due to the Covid-19 epidemic, did not bring about the strong and lasting resumption of economic growth that was hoped for in Beijing.
Therefore, it is likely that Chinese manufacturers of electric cars will be strongly encouraged to do everything to sell as much as possible in Europe, by playing on prices.
With a delay, European car manufacturers will have to adapt to the onslaught of Chinese companies.
When it comes to electric vehicles, the competitive war between Europe and China has only just begun.
mediacongo.net
