Nio plans to begin delivering its ET7 electric sedan from 2022.
Evelyn Cheng | CNBC
SHANGHAI – After the final year of growth in the world’s largest auto market, China’s electric car startups are ramping up their plans to take over Europe.
The Chinese authorities have only begun lifting restrictions on full foreign ownership of local automobile production in the last few years. More than a decade ago, Beijing spent billions of dollars developing its own electric vehicles.
This has helped local players get a head start in making battery powered cars that they are now looking to sell overseas. Goldman Sachs analysts predict that in four years’ time, due to new government guidelines, electric cars will have a larger share of auto sales in Europe and the US than in China, although this is the largest market.
US-listed company Nio has announced that it will enter Europe in the second half of this year. And on Monday, co-founder and president Lihong Qin said the company expected to make an official announcement of such an expansion within a month.
He did not name a specific country, but stated that after Europe, Nio still intended to enter the US market.
Amid tensions with the US and attempts to secure an investment deal with Europe, China exported 63,500 all-battery electric vehicles in the first eleven months of last year. According to a January report by the Chinese Chamber of Commerce for the import and export of machinery and electronic products. While Saudi Arabia and Egypt were the top travel destinations for Chinese cars overall last year, the report saw significant growth in vehicle exports to the UK, Belgium and Germany.
The US-listed company Xpeng is already testing the waters in Norway, where the start-up delivered 100 units of its G3 electric SUV in December.
Later this year, Xpeng hopes to see how customers in Northern Europe react to its P7 electric sedan, said He Xiaopeng, chairman and CEO. He is recruiting new employees and planning to start a business in the region before venturing into Western and Eastern Europe.
Another Chinese electric car startup, Aiways, said it exported more than 1,000 vehicles to Israel and Europe in the first three months of this year.
“It’s no longer a secret that most Chinese EV startups have global ambitions,” said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights. “It will stay that way as these companies seek growth and value and see opportunities because there are no viable electric vehicle products in the region.”
He said that with enough local research, some of the Chinese companies in Europe could thrive.
However, the growth in Chinese electric car sales to Europe remains a tiny part of the market.
China accounted for less than 2% of the EU’s car imports in 2019, and the value of 865 million euros represents an increase of 79% over the previous year European Association of Automobile Manufacturers.
In contrast, EU-owned automakers produced almost 6 million passenger cars in China in 2018, which is almost a quarter of total Chinese automobile production. the club said.
Increasing competition in China
The overseas Chinese startup company comes in when the home market warms up. Nios Qin said the entry of tech companies like Apple and Huawei into the industry creates fierce competition for the automaker.
On the automobile front Tesla is the market leader and is expanding local production. According to the China Passenger Car Association, the Model 3 was the best-selling electric car in China last year.
With the exception of two mini-electric cars, the association said the next best vehicle in this category would be Aion’s S model, a new energy brand that was spun off from Chinese state-owned automaker GAC. A more expensive model from Nio took ninth place, while Xpeng did not make the top ten list.
“Chinese consumers are increasingly understanding new energy vehicles,” said Qiu Liangping, Aion’s design director, according to a CNBC translation of his Mandarin remarks. In addition to making battery charging easier, Chinese buyers are looking for a better driving experience than fossil fuel cars with internet-enabled features.
The brand also has its eye on the international market, said Qiu. Prior to the spin-off, Aion and GAC’s Trumpchi brand were already selling cars in Israel, the Middle East and South America.
As the automotive industry continues to move into the electrical space, traditional US and German auto companies are launching their own electric vehicles – many in the Chinese market first.
For example, General Motors’ Cadillac brand presented its Lyriq electric car at the Shanghai Auto Show. Pre-orders in China will begin later this year, according to the company.
Ford also used the show to unveil its locally made version of the Mustang Mach-e electric car, as well as an Evos SUV developed largely in China that will only be available in the country.
Volkswagen unveiled a third electric car for China, the ID.6, in Shanghai. The German automaker aims to have at least 70% of its cars sold in Europe and at least 50% in North America and China by 2030.