China’s carmakers to launch EV offensive – DW – 09/01/2023


The idea that the IAA is a show focused strictly on the automobile has been inaccurate for some time now. At the height of the COVID-19 pandemic two years ago, the organizers — the German Association of the Automotive Industry (VDA) — completely revamped the former auto show in an attempt to secure the survival of the fair as a “globally unique mobility platform” in a new location, namely Munich.

The IAA began in Berlin in 1897 and stayed there for 50 years before moving to Germany’s financial hub of Frankfurt am Main.

Now in Munich for the second year in a row, the IAA wants to be seen as a showcase of “urban mobility,” exhibiting “mobility ecosystems,” and not merely a single mode of transportation, the automobile. The marketing pitch sounds like an excuse for the absence of many foreign automakers in Munich this year— indeed, more bicycle manufacturers are set to attend, whatever that says about the new IAA’s appeal.

Big Auto and newcomers

Quite naturally, the big three of the German automobile industry — Volkswagen (VW), BMW and Mercedes-Benz — have a vested interest in holding the event in their home market. But the list of globally known brands represented in Munich is shorter than ever, with, apart from the German heavyweights, only Renault from France and Stellantis Group’s Opel brand.

A handful of exotic newcomers to the electric vehicle market like Lucid from the United States and Croatian electric sports car maker Rimac are also present. Vietnam’s Vinfast EV company withdrew its participation at short notice, no reason given.

China on the offensive

In the absence of the auto industry’s big whales, some of the small fry are looking to create a splash on the European car market. One of them is BYD — initials stand for Build Your Dreams — a Chinese manufacturer based in the industrial hub of Shenzhen.

In China, BYD is an industry whale itself, especially with its battery-electric vehicles (BEVs) that are so successful that BYD last year replaced VW as Chinese market leader by sales. BYD is now building the dream of conquering the European market with its BEVs and plans to showcase six of its models at the IAA.

BYD will introduce its luxury sub-brand DENZA (pictured) to the European market and unveil its SEAL U modelImage: VCG/IMAGO

BYD used to be a manufacturer of smartphone batteries, but is now applying the know-how gathered in its early days to produce state-of-the-art batteries for EVs.

BYD car batteries do not require nickel, cobalt, and manganese, which makes them less expensive to produce. In terms of software and technical innovations, China’s EV makers have also made big strides in recent years, and are now on the cutting edge of digital applications for cars.

China-made EVs are still few and far between on German roads — BYD has sold 1,448 cars so far, while VW has delivered 207,000 EVs in Germany. However, experts believe BYD and other Chinese EV makers will be able to win customers in Europe with significantly lower prices for their cars.

There is precedence: In the 1980s and 1990s, carmakers from Japan and South Korea were initially laughed at for their cars, but they then steadily increased their market share through lower prices and better quality.

How strong is Chinese competition in the e-car market?

This browser does not support the video element.

Tesla flying the e-mobility flag in challenging times

Despite the shortage of big names at this year’s IAA, exhibition halls are 90% booked, according to the VDA industry group. IAA’s design concept has been changed and now includes two separate locations — the main exhibition center for professional visitors and a so-called Open Space in downtown Munich for the general public.

BYD said it will showcase its cars at both locations. Perhaps it was this Chinese IAA dominance that made the organizers bend over backward to ensure the presence of the world’s most valuable carmaker: Tesla. It is not known, however, why CEO Elon Musk has finally given in to VDA’s courting, as Tesla usually prefers to organize its own special events to promote its technology.

Tesla, BYD and the German carmakers are currently locked in a fierce battle for bigger shares of the emerging EV market in Europe. After overcoming supply-chain snarls amid the COVID pandemic, German auto giants are back in expansion mode with surging sales and profits in the second quarter.

Auto experts predict challenging times ahead, however. “China is well on its way to becoming an automotive superpower,” said consulting firm AlixPartners in a note to investors recently, and added that the era of record profits for German manufacturers is “coming to an end.”

Consultants at EY also sense “strong headwinds” for legacy manufacturers in their home markets.

As far as the world’s biggest car market China is concerned, more than one study predicts domestic manufacturers reigning supreme, with their market share surging to about 65% by 2030.

This article was originally published in German. 



Read More: China’s carmakers to launch EV offensive – DW – 09/01/2023

2023-09-01 13:12:38

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments