SHANGHAI, China — China’s electric car start-ups are ramping up plans to take on Europe after a year of success in the world’s largest auto market.
Only in the last few years have Chinese authorities begun to relax restrictions on full foreign ownership of domestic car manufacturing. However, Beijing started investing billions of dollars in the production of its own electric vehicles more than a decade ago.
This has aided local manufacturers in gaining a competitive advantage in the production of battery-powered vehicles, which they now plan to market internationally. According to Goldman Sachs analysts, new government policies would result in electric cars accounting for a greater share of auto sales in Europe and the United States in four years than in China, despite China being the largest market.
Nio, a publicly traded company in the United States, has stated that it will join Europe in the second half of this year. Lihong Qin, co-founder and president of the company, said on Monday that the company plans to make a formal announcement about the expansion within a month.
He did not name a specific country, but did say that after Europe, Nio plans to join the American market.
According to a January study from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, China exported 63,500 pure battery-powered electric vehicles during the first eleven months of last year, despite disputes with the United States and attempts to reach an investment agreement with Europe. Despite the fact that Saudi Arabia and Egypt were the top destinations for Chinese cars last year, the study noted substantial growth in vehicle exports to the United Kingdom, Belgium, and Germany.
Xpeng, a publicly traded company in the United States, is already testing the waters in Norway, where it delivered 100 G3 electric SUVs in December.
Xpeng hopes to see how customers in northern Europe respond to its P7 electric sedan later this year, according to chairman and CEO He Xiaopeng. He is hiring new employees and intends to establish a business in the area before moving on to Western and Eastern Europe.
In the first three months of this year, another Chinese electric car start-up, Aiways, said it had exported more than 1,000 vehicles to Israel and Europe.
Tu Le, founder of Beijing-based consulting firm Sino Auto Insights, said, “It’s no mystery now that most of China’s EV startups have global ambitions.” “This will continue as these businesses seek growth and value, seeing promise in the region’s lack of viable EV products.”
He believes that with more local research, some Chinese companies could succeed in Europe.
However, any increase in Chinese electric vehicle sales to Europe is only a small part of the industry.
According to the European Automobile Manufacturers Association, China accounted for less than 2% of EU passenger car imports in 2019, with a volume of 865 million euros, representing a 79 percent increase over the previous year.
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According to the association, EU-owned carmakers produced nearly 6 million passenger cars in China last year, accounting for nearly a quarter of total Chinese car production.
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Rising competition within China
The international expansion of Chinese start-ups comes as the domestic market heats up. The entrance of tech companies such as Apple and Huawei into the industry, according to Nio’s Qin, is generating fierce competition for the carmaker.
Tesla is the industry leader in automobiles and is increasing local production. According to the China Passenger Car Association, Tesla’s Model 3 was the best-selling electric car in China last year.
The S model from Aion, a new energy brand spun off from Chinese state-owned automaker GAC, was the next best-selling vehicle in the group, according to the association, except two mini-electric vehicles. Nio’s more expensive model came in seventh, while Xpeng was absent from the top ten.
According to a CNBC translation of his Mandarin-language remarks, Aion’s planning department director Qiu Liangping said, “Chinese consumers understand new energy vehicles more and more.” He claims that Chinese consumers are looking for a better driving experience than that of fossil fuel-powered vehicles, as well as internet-connected features.
According to Qiu, the brand is also interested in the foreign market. Aion and GAC’s Trumpchi brand were already selling cars in Israel, the Middle East, and South America before the spin-off.
Traditional U.S. and German car companies are introducing their own electric cars, many in China first, as the automotive industry pushes deeper into electric power.
For example, at the Shanghai auto show, General Motors’ Cadillac brand unveiled the Lyriq electric car, which will be available for pre-order in China later this year, according to the company.
Ford also used the show to debut its locally built Mustang Mach-e electric car, as well as a largely Chinese-developed Evos SUV that will only be sold in China.
The ID.6 is Volkswagen’s third electric car for China, which was unveiled in Shanghai. By 2030, the German automaker wants at least 70% of its cars sold in Europe to be electric, and at least 50% of its cars sold in North America and China to be electric.
