China’s electric vehicle (EV) manufacturers, which have already dominated sales in their home country, are now venturing into the European market, presenting themselves with a fresh array of obstacles and opportunities.

Chinese brands like BYD, Nio, and SAIC’s MG are aiming to break through stereotypes associated with Chinese manufacturing.

They also need to address concerns regarding import costs and a less mature EV market in Europe. These challenges are significant, yet Chinese EV makers are making strides.

In the current year, Chinese brands have accounted for 8% of new EV sales in Europe, a noticeable increase from the 6% the previous year and the 4% in 2021, according to Inovev, an automotive consultancy.

Furthermore, the influx of Chinese EVs is only beginning, with projections suggesting that at least 11 new mass-market EVs manufactured in China will be introduced to the European market by 2025, as highlighted in a study conducted by Allianz.

This surge of Chinese EVs has prompted concern among Western automakers. Carlos Tavares, the CEO of Stellantis, which oversees brands like Peugeot and Fiat, has cautioned about an “invasion” of competitively priced Chinese EVs in Europe.

Western manufacturers are responding with their own flurry of EV releases and strategies to lower production costs and retail prices, heightening the competitive landscape for Chinese newcomers.

Navigating Expansion and Complexity

While expanding their footprint, Chinese automakers are advised to avoid overextending themselves.

Chen Shihua, deputy-general of China’s automobile manufacturing association, has noted the potential risks of excessive expansion. He emphasized the importance of a clear focus and strategic approach to global growth.

Price Advantage and Hurdles

One of the strengths Chinese EV makers bring to Europe is their pricing advantage. In the first half of 2022, the average price of an EV in China was significantly lower—less than 32,000 euros compared to around 56,000 euros in Europe, according to research from Jato Dynamics.

However, the challenge lies in maintaining such competitive pricing in the European market. Factors like logistics, sales taxes, import duties, and meeting European certification standards contribute to added costs.

Spiros Fotinos, Europe CEO of the Chinese brand Zeekr (owned by Geely), pointed out that delivering cars from China to European distribution sites, especially through congested ports with lengthy lead times, is a considerable challenge.

Additionally, European consumer preferences, such as the demand for larger batteries for extended travel distances, can contribute to increased costs, as noted by Alexander Klose, overseas chief of the Chinese EV startup Aiways.

Building Consumer Trust

A significant hurdle for Chinese EV makers is gaining consumer trust in Europe. Surveys reveal that most potential EV buyers in Europe are unfamiliar with Chinese brands, and even among those who are aware, hesitation persists.

This scenario mirrors the challenges faced by Japanese and South Korean automakers in the past as they worked to earn trust and adapt to European tastes.

For instance, a YouGov survey in 2022 showed that only 14% of 1,629 German consumers were aware of BYD, the second-largest EV manufacturer globally, following Tesla.

Similarly, awareness of premium brands like Nio, Lynk & Co, and XPeng remained relatively low at 17%, 10%, and 8% respectively. In contrast, 95% of consumers were familiar with Tesla, and a notable 10% of them were considering purchasing a Tesla for their next car. In contrast, Chinese brands garnered interest from merely 1% or fewer of aware consumers.

To overcome this, Chinese automakers have taken proactive measures. Several have achieved five-star safety ratings under Europe’s rigorous safety standards, surpassing minimum requirements to allay consumer doubts.

Companies like Zeekr aim to build trust through test drives and showrooms, providing European customers an opportunity to experience the quality of their EVs firsthand. This hands-on approach has proven effective in highlighting the competitive features and specifications of Chinese EVs, often exceeding expectations.

Chinese state-owned carmaker GAC has undertaken a unique strategy by establishing a design bureau in Milan, allowing them to gain insights into European consumer preferences before entering the sales phase.

Embracing healthy competition and innovation is considered crucial for overcoming lingering stereotypes and fostering consumer trust.

In conclusion, Chinese EV makers are on an ambitious journey to conquer the European market, armed with competitive pricing, strategic expansion plans, and efforts to gain consumer trust.

While facing challenges related to costs, consumer perception, and market nuances, these manufacturers are determined to prove their mettle on the global stage. As the automotive landscape evolves, the entrance of Chinese EVs into Europe marks an exciting chapter of competition, innovation, and growth in the electric vehicle sector.