Europe looking to fight flood of Chinese EVs

LONDON

When Laima Springe-Janssen was looking to replace her French-made gasoline-powered SUV with an electric car, she considered models from Volvo and Nissan.

The Volvo extras she wanted would have busted her budget, while the Nissan lacked the “wow factor.” The Copenhagen, Denmark, resident ended up buying a compact SUV from China’s BYD.

“I really, really love the car,” Springe-Janssen said. For the equivalent of about $50,000, the Atto 3 SUV came with “all these goodies” like a 360-degree dash cam, two years of free charging and an extra set of winter tires.

Her husband likes it so much he’s considering buying another BYD to replace their other car, from Volkswagen’s Skoda brand.

“I’m sorry, Europe. Go home,” she said. “China has a better offer.”

Her enthusiasm underscores how Chinese automakers are winning over drivers as they make major inroads into Europe’s electric vehicle market, challenging long-established homegrown brands in an industry that’s key to the continent’s green energy transition.

The competitive threat has spurred the European Union to launch an investigation into Beijing’s support for its EV industry. That adds to tech-related tensions between the West and China, which is one of Europe’s biggest trading partners and the world’s biggest auto market.

China’s EV onslaught, along with massive U.S. clean energy funding that has drawn investment away from Europe, shows how the 27-nation bloc is caught in the middle of the global race for green technology.

Chinese EV makers are drawn to Europe because auto import tariffs are just 10 percent versus 27.5 percent in the U.S., independent auto analyst Matthias Schmidt said. Europe also has the world’s second-biggest EV battery market after China.

Nevermind the geopolitics. Climate-conscious car buyers in Europe who are grappling with an increased cost of living rave about how Chinese EVs are affordable yet packed with features and stylish design. Concerns about the threat to local carmakers and jobs just aren’t a factor for them.

MG, owned by SAIC Motor, China’s biggest automaker, is the largest Chinese EV player in Europe. BYD, backed by billionaire investor Warren Buffett, is growing fast. There’s also Geely, which owns Sweden’s Volvo and a stable of EV brands including Polestar, Lynk & Co. and British sportscar maker Lotus.

Behind them are a slew of startups, like NIO and Xpeng.

Their combined sales are a sliver of the 9.2 million vehicles sold in Europe every year, but they have been gobbling up a piece of the smaller EV market at an astonishing pace.

Chinese automakers account for only about 3 percent of Western Europe’s overall car market but 8.4 percent of the EV market, up from 6.2 percent last year and almost nothing in 2019, according to Schmidt’s data.

The surge is stoking fears about Europe’s automotive industry, an economic powerhouse centered in France and Germany that employs millions of workers, staying competitive as it transitions from fossil fuels to electricity.

One reason Chinese companies can offer high-quality cars at affordable prices stems from the rules to enter the Chinese market. Global automakers had to team up with local companies, providing them crucial automaking knowhow.

Also helping level the playing field is battery-powered motors being less complex to build than internal combustion engines and requiring fewer workers. That’s a problem for European brands with big workforces that will need years to revamp operations, Schmidt said.