Chinese EV makers are steadily advancing on the world market, increasing their market share. KPMG is predicting that they will capture around 15% of Europe’s EV market by 2025, as established players such as BYD and emerging companies such as NIO and Li Auto gain popularity among European consumers. This would mark a big step forward as Chinese marques accounted for less than 10% of the 1.1 million battery-powered EVs sold in Europe in 2022, KPMG said. Kevin Kang, Chief Economist at KPMG China, said, “Homegrown Chinese brands have huge potential in the European market and could contribute the most to future sales increase there.” Europe is the world’s second-biggest and fastest-growing EV market after China, and is expected to see surging demand for EVs following the European Union’s announcement that it will ban the sale of new fossil-fuel cars from 2035 to combat climate change. Europe accounted for about half of the 1 million new energy vehicles (NEVS) that China exported last year, according to the KPMG report. NEVs include BEVs, plug-in hybrids and fuel-cell vehicles.
Europe is a priority destination for Chinese electric car manufacturers seeking a global footprint, experts and company executives said. Within Europe, Belgium imports the largest number of Chinese-made NEVs. Most Chinese car companies choose to transport their vehicles to other European countries through Belgium, the KPMG report said. As Chinese EV makers expand their footprint by opening more stores and plants overseas, as well as providing more services and products tailored to international consumers, they are expected to improve their brand recognition and increase their market share, Kang said.
Ding Yuqian, Director of China Auto Research at HSBC, said China has the world’s most competitive EV battery supply chain. The single most expensive element of an EV is its battery. Carmakers based in China have access to high-quality batteries produced at a relative cost advantage, with manufacturers continuing to improve the technology. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), said demand for Chinese-made EVs has been surging in major markets such as Europe and Southeast Asia.
China surpassed Japan as the world’s largest vehicle exporter in the first half of this year. The milestone came on the back of growing desire among overseas car buyers to own Chinese-made NEVs, according to the General Administration of Customs. Cui estimated China’s full-year vehicle exports, including both NEVs and fossil-fuel vehicles, may reach 5 million units, up from 3.11 million units in 2022. China’s exports of NEVs totaled 636,000 vehicles from January to July, up 150% year-on-year, according to CAAM data. Sensing an uptrend, Chinese auto and battery companies are beefing up investments and sales in Europe. Last year, the automotive industry accounted for about 53% of China’s investment in Europe, 33 percentage points higher than in 2021, according to KPMG. Six Chinese battery companies, including Contemporary Amperex Technology Co (CATL), the world’s largest EV battery maker, have established or plan to establish factories in Europe, KPMG said. Meanwhile, most Chinese car companies have established R&D centers in Europe to better understand local market demand and establish connections with local suppliers and distributors. Since 2017, car companies, including BYD, Geely and NIO, have been building factories in Europe for either new energy buses or passenger cars.
NIO built its first overseas factory in Hungary, which covers 10,000 square meters and serves as its manufacturing, service and research and development center in Europe. In September 2022, the factory completed the production of its first battery swap station, which was then shipped to Germany. Qin Lihong, Co-founder and President of NIO, said Hungary’s open, pro-investment environment is an important assurance for the company’s European factory and helped in quickly putting it into operation; so, the carmaker will further increase investment in Hungary.
In an interview in April, Qin also said that next year, the company will launch a fresh brand of vehicles for the European market. They will be made at a new factory in China. NIO’s European journey, its first outside China, started in May 2021 when it announced its strategy in Norway. In October 2022, it announced its entry into four European countries: Germany, the Netherlands, Denmark and Sweden. NIO has established a global R&D layout, with R&D centers and production sites in cities such as San Jose, Munich, Oxford, Berlin, Budapest and Singapore. Currently, it has over 10,000 R&D staff members. Meanwhile, NIO is stepping up its push to build infrastructure to support the sales of its EVs. So far, it has installed 24 battery swap stations and nine charging stations overseas. It plans to have 120 battery swap stations by the end of this year.
In July, 780,000 NEVs were sold in China, up 31.6% year-on-year. Sales in the first seven months this year reached 4.53 million units, up 41.7% year-on-year. Last month, Chinese brands combined seized a 57.2% share of the country’s passenger car market. For the period from January to July, the figure stood at 53.8%, the China Daily reports.
