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The electric vehicle under strong Chinese pressure - Companies

The electric vehicle under strong Chinese pressure – Companies

The Mondial de l’Auto in Paris was shunned by many manufacturers but not by the Chinese, who are more and more interested in Europe. After MG, BYD and a few others arrive, and worry more than one competitor.

The Paris Motor Show, which took place from October 17 to 23, was a disappointment as there were so many absentees. The majority of manufacturers have not bothered to move. The meeting nevertheless remained a bit “global”, given the presence of many Chinese brands, alongside French flagships such as Renault and Peugeot.

The Paris Motor Show, which took place from October 17 to 23, was a disappointment as there were so many absentees. The majority of manufacturers have not bothered to move. The meeting nevertheless remained a bit “global”, given the presence of many Chinese brands, alongside French flagships such as Renault and Peugeot. Among the latter, let us mention BYD, whose stand was very popular. Unknown to us, this manufacturer is close to Tesla in the number of copies of electric vehicles produced. It is the illustration of the Chinese breakthrough on the European automobile market. A first dealership has also been opened in Zaventem, Chaussée de Louvain. You can try three electric models there, including the Atto3, an SUV in the format of a VW ID sold at 45,990 euros. Not cheap, of course, but much cheaper than its European competitors with comparable equipment. That Chinese models could be sold in Belgium at this price would have been unthinkable fifteen years ago, even less so for company fleets. In 2006, the independent retailer Cardoen organized an exhibition of Chinese brands at its Antwerp headquarters to gauge public interest, with little success. At the time, the press articles relating to these cars (then with heat engines) were not very complimentary. The specialists judged their mediocre qualities, before finishing them off by presenting the disastrous results of the crash tests to which they had to submit to be approved. Today, the situation has reversed. The BYD Atto3 SUV earned five stars in Euro NCAP testing. Either the maximum score, that of the best European brands. And the articles from the specialized press are positive. We praise the design of the model but above all its very advanced technology. The group designs and builds batteries itself (it is the second largest producer in the sector) and equips its latest models with state-of-the-art lithium, iron and phosphate (LFP) batteries. These accumulators are cheaper, last longer than the batteries fitted to the majority of electric cars (which run on nickel, cobalt and manganese) to the point of being guaranteed for 200,000 km or eight years (for a minimum of 70% of its capacity) , with a very competitive autonomy, around 400 km. No European brand has yet dared to offer this type of offer. BYD is not the first Chinese manufacturer to try its luck in Europe. MG is already present and has already nibbled away at the moderately priced electric market, with a model around 10,000 euros cheaper than the European competition. European manufacturers are worried about it. At the Mondial de l’Auto in Paris, the CEO of Stellantis, Carlos Tavares, railed against the red carpet rolled out by Europe under the feet of Chinese manufacturers. “That’s not how we are received in China,” he said to our French colleagues from Les Echos. The boss of the group that manufactures Peugeot, Citroën, DS, Fiat, Chrysler, Jeep, etc., is asking the European Union to increase its taxes to the level of those applied to models that China imports. And the French President, Emmanuel Macron, wants incentives for the purchase of electric vehicles to be reserved for models built in the Union, a bit like the United States has just decided for their market. It must be said that European manufacturers have thrown themselves into the race for electrification somewhat in a disorganized manner. A group like the one led by Carlos Tavares, for example, is a little behind its competitors, and a Chinese tide could actually make things even more difficult. But the effects of such protectionist measures can be tricky. If the Chinese manufacturers offer consumers a financially more attractive offer than that of the European competition, it nevertheless fits well with the objectives of transition to a zero-emission vehicle fleet desired by the Union. Will Carlos Tavares’ calls for protectionism be heard despite everything? Not sure, because other European manufacturers, more discreet, rely on the good quality of their relations with China. In particular to supply batteries there or simply sell vehicles…. This country is for example the first market for Mercedes, with 38% of sales in volume in 2021. Stellantis is less concerned, and tends to withdraw from this market. Electric cars made in China are also more present on our roads than we think. Some “Western” models are manufactured there, such as Tesla’s Model 3 or the BMW iX3. Proud of its 1,137 units registered from January to September in Belgium, the Polestar is also Chinese, even if its design appeals to old Europe. The brand belongs to the Chinese group Geely, which notably controls Volvo. A group that also co-owns, with Mercedes, the Smart brand, whose new four-door electric model, the Smart#1, is just arriving on the Belgian market. Other explicitly Chinese brands are also present, but without having achieved any real success yet. BAIC, DFSK or Aiways have only registered a few dozen units each this year. Aiways had some delivery problems, but Cardoen has resumed marketing. “Aiways will be present at the show in January”, assures Ivo Willems, CEO of Cardoen. The Chinese brand that is gaining momentum in Belgium is MG (SAIC group), which registered 586 vehicles from January to September, more than Alfa Romeo or Lexus. It hopes to make a leap with the arrival of its MG4 model, an electric in the format of the electric Renault Megane and the VW ID. 3, and which will be sold at least 10,000 euros cheaper. Not yet announced on the Belgian market, it is marketed in France and Great Britain at a price that starts at 28,990 euros, the price of a fuel-powered brand car, and is selling very well there. It is also possible that the absence of a date for the introduction of the model in Belgium is due to the desire not to overload the order book and delivery times. In any case, it is a vehicle that can generate good volumes. Volumes that BYD intends to achieve with its Atto3 SUV, which belongs to a segment in high demand on the fleet market. “We hope to sell 90% of this model to companies”, explains Frederik Van den Bossche, fleet manager for BYD Belux, who presented the vehicle to leasing companies. “Companies are already pushing more and more for electrification, but not everyone is entitled to a battery-powered car of this format in the brands currently available,” he notes, hoping that the Atto3 can fill this gap. The other argument is availability. The Inchcape group, the importer of BYD models in Belgium, which also imports Toyota, has obtained a stock of more than 200 cars, which sleeps in Zeebrugge. Once this was exhausted, a maximum of three months of waiting would be necessary to receive other vehicles. The manufacturer, which is very vertically integrated, has less of a problem with delivering than other manufacturers. “BYD has dominated the home market this year, defying supply disruptions and shortages of chips and battery raw materials that plague other manufacturers, including Tesla,” the Wall Street Journal wrote on October 10. noting that the group has more than tripled its average monthly production this year. It delivered 95,000 electric vehicles in September where its Chinese competitor MG is having more difficulty meeting deadlines. BYD plans to release two other models in 2023: a compact car and an even smaller one in the format of the VW Polo. “We will rather target, for these models, the private market”, assures Frederik Van den Bossche. Other Chinese brands are still expected. These include XPeng, a start-up that is present in the Netherlands, and Great Wall, which landed in Germany and is arriving in France. But also Nio, a manufacturer present in Norway which offers a model based on the exchange of batteries in stations (read the box below). This manufacturer could land in Belgium in 2023 or 2024. However, a few final obstacles still stand in the way of this Chinese surge. There is that of delivery times, because the shortages of components also affect several Chinese manufacturers. Especially since the very severe measures to fight against covid block certain factories. And then, if these models are today taken more seriously, the “made in China” sometimes remains poorly perceived, in particular for increasingly geopolitical reasons. The era of happy globalization has passed… “Some companies will probably not want to include Chinese cars in their fleet, recognizes Frederik Van den Bossche. But in a worst case scenario, even if this reaction represents half of the market, there will still be 50% that will be open there, that’s still a lot.”

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