China is aiming for Europe with its electric cars
Carmakers of the Dragon invest in plants, research and now also sales of electric or hybrid vehicles in the old continent, which in 2020 saw purchases explode
The view from the rear trocar of the NIO x Razer ES6 Night Explorer In early February, Faw, a government-owned Chinese car group, confirmed its intention to build its first electric car factory abroad in Emilia Romagna. Between Modena and Bologna, in those two hundred kilometers that have put some of the most famous engine companies in the world on the road, from Ferrari to Ducati, from Dallara to Lamborghini, from Maserati to Pagani, Faw in tandem with the Sino-American startup Silk- Ev will invest one billion euros in the plant. Jonathan Krane, president of Silk-Ev, specified that the factory will produce high-end electric and plug-in cars, "which represent the fastest growing ones in the world market", for both the Chinese and European markets.In 2020 the old continent overtook the Dragon for sales of electric or hybrid vehicles, according to preliminary data from the sector specialists of Ev-volumes. In a market that, due to Covid-19, has seen turnover drop by 20%, registrations of electric and plug-in hybrid cars have reached 1.39 million, + 137% compared to 2019. Approximately sixty thousand more than those sold in China, which had been unbeaten leaders for five years. The association of European car manufacturers, Acea, calculates that in 2020 electric and hybrid vehicles have respectively reached 10.5% and 11.9% of the fleet of the old continent. Just twelve months earlier they had stopped at 3% and 5.7%.
All European car manufacturers have announced plans for electrification. Stellantis, born from the merger between Fiat-Chrysler and PSA, adopts a platform that allows the production of thermal and electric vehicles. Volkswagen has put 73 billion on the plate. Audi alone has a 17 billion plan to 2025. Data from the European observatory for alternative fuels show that, with 10.7% of the total, the Renault Zoe is the best-selling electric car of 2020, followed by the Tesla Model 3 (5.2%).
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The European countryside
The old continent is tempting. Elon Musk arrived from the United States and is building the first European plant on the outskirts of Berlin. But, as Faw demonstrates, Chinese producers are also taking the field. Geely, a multinational company from Hangzhou that bought Volvo in 2010, soon plans to join the electric cars of Volvo and its subsidiary Polestar in Europe with a third brand, Lynk & Co, which, although born in Sweden, had so far been destined for the Chinese market , where it has sold around 400,000 vehicles. "For Europe we are exploring new business models, such as direct sales to the consumer - explains a spokesperson for Geely to Wired -. Lynk & Co is already expanding rapidly on the market with experience stores in Amsterdam and Gothenburg and others have been planned. "All Chinese manufacturers are moving their pawns to Europe. In February, Xpeng shipped 209 electric cars to Norway, "which is the leading country for the penetration of electric cars," said Philippe Vangeel, secretary general of the European association of electric mobility (Avere). William Li, CEO of Chinese Nio, has indicated 2021 as the year in which he wants to land in Europe with his four-wheeler battery. BYD, headquartered in the city of the terracotta army, Xi'an, has already placed around 1,400 electric buses in the countries of the old continent. Svolt, a branch of the auto giant Great Wall Motors, will invest two billion euros in its first battery factory in Germany, where already in 2019 it arrived from Fuzhou Catl, specialized in lithium-ion batteries.
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More sales in the old continent
What makes Europe a greedy market are the Commission's ambitious policies. In its plan for the ecological transition, the European green deal, Brussels sets itself the goal of "reaching one million charging points and 13 million low- or zero-emission vehicles on the road," sums up Vangeel. The combination of community plans, local incentives and "increased supply", continues Vangeel, "passed from 5-10 models a few years ago to almost 50 at the end of last year" explain the jump in sales between 2019 and 2020.For China, this situation offers a lot of opportunities. On the one hand, observes the secretary of Avere, Beijing "has slowed down its subsidies for the purchase of electric cars" and this could put younger startups in difficulty. On the other hand, Europe has raised the bar for cutting emissions. "It wants to reach -37.5% by 2030", the level made one hundred by 2020, says Vangeel, but the production of traditional car manufacturers is still limited "and the demand higher than the supply".
According to Davide Di Domenico, general manager and partner of Boston consulting group (BCG), Europe is “yes attractive”, but also “expensive and complex and new entrants struggle”. This is because it is “fragmented into many markets: Spain, Germany, France, Italy, it sells differently, and is complex from a regulatory point of view”. The offer will also become more substantial, creating a new challenge factor: BCG calculates that it will reach one hundred models in 2022. In general, a good strategy, according to Di Domenico, "would be to attack first the countries of northern Europe, which have strong and stable incentives, and then move on to continental and southern Europe ”. China presents itself with startups "that are ahead of or at the same point as the US ones and with a digitally advanced internal market and consumers ready for this change", comments the expert.
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Reverse route
For this reason Europe, at least in a first phase, could be used to rinse the clothes of its brands and place them at a high price range. Faw and Silk-Ev, for example, focus on the Italian design of the Emilian Motor Valley for the new range that they will unveil in Shanghai in April. Changan has made Europe its research and development center. In Turin it has recruited 200 people, in a 12,500 square meter plant, who work on design, experience and user interface, model design from a to z. "The Turin center provides comprehensive design services for many research prototypes and new models from the Changan production range and has made an outstanding contribution to the brand's various successes in the global automotive market," the company said. Hybrid and electric vehicles and autonomous driving systems are also among the research frontiers.However, despite having teams in Germany, France and Finland, as well as in Italy, Changan has so far not invested in sales in Europe (two million vehicles sold in 2020). "We have explored opportunities and ways to enter the European market and we are confident that this will happen in the not too distant future", the answer to Wired.
For Di Domenico at this stage it is easier to focus on the high range for the domestic market, boasting a design made in Europe. What could break the balance, he adds, "is a low-end car. Tesla is thinking about it, which has developed innovative solutions on critical parts and is five years ahead from a technological point of view, and the Chinese are thinking about it ”. Another variable are company fleets, increasingly oriented towards hybrid and electric cars. In Europe, according to Bloomberg, six out of ten electric vehicles are destined to replenish the car fleet of companies, which are rewarding traditional manufacturers in spite of Tesla for the capillarity of assistance services. Finally, the scarce chip production weighs heavily, about 12% of which is absorbed by the car industry. Nio, for example, had to reassure its investors that it had enough to cover production in the first half of the year.
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The expansionism of the Dragon
Not only that. In recent years, the same European manufacturers, as emerges from an analysis by the Mercator Institute for China studies (Merics), have moved the research centers on electric cars to China, to stay closer to the more lively market in terms of sales (at least until 2020) and catch up in the development of new vehicles. Since 2018, there have been 41 collaborative projects between European car manufacturers and Chinese groups, including tech giants Baidu, Huawei and Tencent. Merics now expects the bill to come: "Chinese technology companies will increasingly be able to export their standards by supplying them for royalties" and "a future problem for Europe could involve the use of vehicles based on on Chinese technology platforms ". The danger, in short, is that the keys to innovation are now firmly held by Beijing.This is not only an advantage in terms of design and models, but also at a strategic level. Chinese car manufacturers have more knowledge to attack the market and, if necessary, incorporate some competitors or expand into areas deemed attractive. This is the case of the match for Iveco. Just Faw is courting Cnh Industrial, in turn under the umbrella of the Exor of the Agnelli family, for the sale of the brand. A first offer of 3 billion euros was returned to the sender because it was considered too low. But the Chinese do not give up: they are interested in research on electrification and hydrogen for commercial vehicles and in the Iveco plants in Brescia and Suzzara, in the Mantua area. In the first, 2,200 workers are employed on the Eurocargo lines, in the second 1,680 for the Daily. The Minister of Economic Development, Giancarlo Giorgetti, has not ruled out that he wants to use the special veto granted to the government on companies considered strategic, the so-called golden power, to regulate the operation.
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Recharge the network
The coronavirus has reshuffled the cards in the world of four wheels. BCG estimates that Europe and the United States will not recover pre-pandemic production levels until 2023. China, on the other hand, is accelerating towards the target of 30 million vehicles by 2025. A strengthening that could push expansion into other markets and guarantee it leadership in the electric mobility sector.It is already a advanced laboratory compared to the situation in the West. So much so that last November Enel X, the innovative arm of the energy company, opened an office in Shanghai dedicated to the electric transport sector. "We are a world player in the field of electrification of mobility, from charging points to connected services - explains Alberto Piglia, head of the e-mobility division of Enel X - for this reason we wanted to enter the largest car market in the world. electric ". The goal is to export "smart charging infrastructures for private customers and understand if we have a competitive advantage," he adds.
For now, the first signs are encouraging and there have been contacts with various car manufacturers. In the coming months, an agreement with Weltmeister, a brand with a German name but owned by Wm motor of Shanghai, will enter into force to push exports through the creation of charging networks. From China, Enel X looks around. It has already set foot in Singapore and signed agreements in India. On the other hand, all over Asia there is great excitement around the electric car. Consultancy Inkwood Research estimates an annual sales growth rate of 21% through 2028. Europe will have to quickly shake off the internal combustion engine if it is to keep up.
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Topics
Audi Cars China Europe Italy Made in Italy electric mobility startup Tesla Transport Volkswagen globalData.fldTopic = "Audi, Auto, China, Europe, Italy, Made in Italy, electric mobility, startup, Tesla, Transport, Volkswagen"
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