​In recent months, more and more Chinese companies have announced the launch of new markets in Europe, and the Munich Mobility Expo had a record Chinese presence. The market share of Chinese electric cars has increased by more than 100% in two years, and the “heavyweights” of the European industry are restless and sometimes angry.

Schmidt Automotive Research’s study of 18 of Europe’s largest automotive markets showed that in the first seven months of this year, almost as many electric cars from Chinese manufacturers arrived in Europe as in the whole of 2022.

The Chinese got 86,000 electric cars delivered in seven months, 8.3% of the European all-electric car market. The share was just 0.5% in 2019 and 3.9% in 2021, the data also show. The UK is the largest market for Chinese electric cars in Europe, around a third of the total.

15 years ago, the Chinese first tried to enter the European car market, but they failed, mainly due to quality problems. In 2022, the Chinese have launched another “car invasion” of Europe, and this time it looks like they will be more successful.

The top five Chinese automakers include Dongfeng Motor Corporation, SAIC Motor, FAW Group, BYD, and Changan Automobile, which sold more than 16 million vehicles in 2021.

The quality of Chinese cars has also increased because, unlike 15 years ago, significantly more component suppliers from Western Europe and the United States have production in China. In addition, many Western car companies manufacture cars in China with Chinese partners, and these Chinese companies have gained experience. There have also been accusations in the past that Chinese firms attract Western companies, set up joint ventures, “steal” their technology, and then kick them out.

Also, no other country in the world produces as many EV batteries at such low prices, and even the harshest critics of the Chinese will admit that they do a very good job of producing batteries at good prices.

China’s progress has raised concerns in Europe, where the auto industry is a large part of the economy and where battery factories will open at a rapid pace in the coming years, but not enough to overcome dependence on China. There are fears that jobs will be lost in Europe if more and more electric cars are made in China and exported to Europe, rather than produced here on the continent.

Luca de Meo, Renault’s chairman, said the Europeans needed to close the cost gap with the Chinese, especially as the Asians started producing electricity “a generation earlier”. It will be a historic moment when spending parity will be achieved between the Europeans and the Chinese.

Oliver Zipse, head of BMW, said Chinese carmakers were an “existential risk” to the European economy.

But it must be said that all major European car companies need China, have or want to have a wide presence there and cooperate with Chinese companies. Dacia Spring is produced in China, like the Polestar models, because its production in Europe would cost several thousand euros more.

The market share of Chinese cars in the overall European market, including all types of cars (including gasoline and diesel), has increased tremendously. In 2019, the share was only 0.1% and reached 2.8% in the first seven months of 2023.

Why are the Chinese so successful? The Chinese government constantly subsidizes the auto industry to produce electric cars, there have also been significant subsidies for customers, and the Chinese already have years of experience in producing 100% electric cars in large volumes.

China has a large and cheap labor force compared to Europe, North America, South Korea and Japan. Access to raw materials and rare metals is also a big advantage.

Chinese automakers also have the financial wherewithal, and Bloomberg recently reported that two of them have acquired their own transport vessels to enable rapid car exports.

Sources: Reuters, Automotive News, CNBC