Chinese carmakers are considering to set up production sites in Europe to assemble the next generation of electric vehicles (EVs) to avoid the EU’s protectionist tariffs, as a brutal price war at home drives more producers offshore in search of fresh markets. Dongfeng Motor, the Chinese partner of Japan’s Nissan Motor and France’s Renault, is considering setting up a plant in Italy. Chery Automobile, meanwhile, has sealed a deal to build its first European factory in Barcelona’s Zona Franca industrial zone in northeastern Spain with Ebro-EV Motors, according to a company statement. “The plans reflect the fact Chinese EV assemblers are playing a leading role in the transition of the global automotive industry,” said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. “European markets are attractive to many Chinese EV assemblers.”
Dongfeng, headquartered in Wuhan, the capital of Hubei province, is in talks with the Italian government to establish a factory with an annual capacity of more than 100,000 units, according to Bloomberg, which cited Xie Qian, Director of the company’s European operations. State-owned Chery, based in Anhui province, has reached an agreement with its Spanish partner to build its Omoda branded vehicles, two months after it started selling the cars in the country. Ebro-EV said it would own the majority of the venture.
Dongfeng and Chery are following in the footsteps of BYD, the world’s largest electric car maker, by localizing their production in Europe as China’s international prominence in EV design and manufacturing increases. Shenzhen-based BYD said in December it would build a plant in Hungary to reinforce its go-global drive amid worries about additional tariffs likely to be levied on Chinese-made cars. The European Commission launched an investigation into foreign state subsidies last September, and is expected to impose tariffs higher than the standard rate of 10% on Chinese-made EVs.
UBS predicted in September that cars made in China, benefiting from a faster pace of electrification than most other countries, will control 33% of the global market by 2030, up from 17% last year. The Swiss bank said in a report that BYD has a production advantage over Tesla in both mainland China and Europe. The cost of manufacturing a BYD Seal sedan, a potential rival to the comparable Tesla Model 3, is 25% lower in Europe, it added. Dongfeng’s EV unit, Voyah, said it would export more of its vehicles to European markets. Meanwhile, Chery formed a partnership with UK car rental company Octopus Electric Vehicles, which will allow its Omoda EVs to be leased out to local customers. The tie-up between Octopus and Chery came just a month after the UK company signed a preliminary agreement with BYD to buy 5,000 of its cars. In China, BYD kicked off a discount war on February 18, cutting the prices of nearly all of its cars by 5% to 20% as sales in the world’s largest EV market showed signs of slowing, the South China Morning Post reports.
