China's made-in-Europe electric cars pose new threat to automakers
The Chinese company BYD, one of the largest electric car brands in the world, has announced plans for its own factory in Hungary.
China’s electric carmakers are expanding in Europe to blunt the impact of tariffs meant to weaken their price advantage over the region’s ailing legacy manufacturers.
With the EU hiking duties on Chinese electric vehicles to as much as 48%, China’s new generation of green car manufacturers is teaming up with local industry so their cars are considered homegrown.
Without these measures, Chinese electric cars could become thousands of euro more expensive for consumers, or else unprofitable.
Barcelona will soon play host to the Omoda E5, made by China’s Chery Automobile Company, which has partnered with Spain’s Ebro-EV Motors.
In Poland, Chinese maker Leapmotor’s T03 city cars are rolling off an assembly line owned by Jeep and Fiat maker Stellantis.
Meanwhile, BYD has announced plans for its own factory in Hungary, with another on the horizon in Turkey, and Zeekr is weighing up production sites owned by its parent Geely.
The arrival of China’s electric car-makers is a risk for European auto giants, which have little choice but to strike partnerships and make space for their upstart rivals as they face shuttering some of their own sites to adjust to faltering global sales growth.
President of Chery Europe Charlie Zhang said the company is “determined to move ahead with our launch team, with our operation in Europe in the short-term, medium- and long-term”.
Chery and Ebro are targeting production of 150,000 cars a year at the Spanish facility by 2029.
The Spanish plant will assemble cars from kits that have been partially “knocked down”, according to Chery.
Typically, such vehicles are made in cheaper locations, taken apart and then reassembled closer to where they’re sold.
The process, common in auto manufacturing, will allow Chery to avoid EU tariffs imposed on finished cars.
The European Commission is still sorting out how the new tariffs will apply to joint ventures that weren’t part of its anti-subsidy investigation.
While talks could stave off the extra duties before they’re made permanent in November, China has already started a retaliatory probe into alleged dumping of pork products from the EU.
Chinese firms need a workaround for European tariffs to avoid sacrificing profit or exposing customers to the pain.
According to the research company BloombergNEF, the estimated margin for state-owned SAIC’s MG4 EV could plunge from 25% to just 1%.
Some of this could be avoided if the firm raises prices, or if battery costs continue to tumble.
Manufacturers aren’t waiting around for the full picture on tariffs to emerge. SAIC is in talks with the Spanish government about where to build its first production site in Europe, newspaper reported on July 12.
Volvo, the Swedish carmaker owned by Geely, has accelerated plans to build its new EX30 model in Ghent, Belgium, in addition to its factory in China.
This summer, Leapmotor began assembly of the all-electric T03 in Tychy, Poland, at a manufacturing site owned by Stellantis — just six months after they announced the partnership.
Using semi-knocked down kits, Leapmotor will provide EVs that can be assembled at any Stellantis plant worldwide, the latter firm has said.
In Italy, Giorgia Meloni’s government is courting Chinese manufacturers, though some of the biggest carmakers in the country have conflicted feelings about the possibility of increased competition in their home turf.
Despite the car company Stelantis looking to get into business with Leapmotor, its chief executive Carlos Tavares, has repeatedly raised concerns about Chinese firms expanding.
“All European governments are dating Chinese car makers to come to assemble their vehicles in their countries,” Mr Tavares said.
“Italy, France, Germany, Spain, they are all dating the Chinese. We are here for the fight.”
- Bloomberg
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