China Invades Europe - Wave II

BYD, Volvo, Polestar, MG, NIO, Xpeng, CATL, EVE, Tesla

Sep 05, 2023

China Invades Europe - Wave II

Chinese automakers are launching a second wave of attacks on the European market. The first began more than 10 years ago.

Wave I - Beachheads (2010-2022)

Sweden: Geely acquired Volvo in 2010 then added the all-electric Polestar brand. BYD has surpassed Tesla to become the best-selling EV in Sweden.

England: MG, the iconic British brand, was acquired by SAIC in 2005. This year, British consumers will buy more than 100,000 made-in-China MGs.

Spain: Chinese brands like MG, BYD, Chery and Lynk & Co will capture 10% of the Spanish market in 2023.

What do these first wave markets have in common? No strong domestic car industry to protect.

Wave II – Full-Scale (2023-2030)

“It’s a Chinese takeover,” came the text from an alarmed senior executive. He was standing amidst a vast collection of BYDs, MGs, NIOs and Polestars on the floor of the IAA show in Munich this week.

Powerhouse BYD will lead the way. China could be exporting 9 million cars a year by 2030. Link

Oliver Zipse, CEO at BMW, did not mince his words: “Chinese automakers pose an imminent risk to Europe’s auto industry.”

What Happens Next

No one can match the Chinese on cost.

But Chinese automakers need Europe. That is because the China home car market has turned anemic.

Today, Europe’s door is wide open. If the Chinese automakers come in too hot, Brussels could opt for tariffs, quotas – or both.

BYD Seal: Cute or menacing? Depends who you ask.

Future EVs, Batteries, Charging

Electrics

Tesla’s MMA Pricing. Meek is not the word to describe Tesla’s pricing movements. The base Model X has shrunk from $120,000 in January to under $80,000 this week. The cuts are designed, in part, to put enormous pressure on competitors. Buy an X now and you get juicy federal tax credits. Link

Batteries

China’s Complicated Hungarian Connection. Chinese battery makers look to Hungary as a friendly base for European operations. CATL continues to build its massive $8 billion dollar battery plant there. Other Chinese battery makers like BYD, EVE Energy and Huayou Cobalt are coming, too. Now, people are asking if Hungary tilts EU or Russia/China. Link

China’s Hyper Capacity. China’s battery making capacity is stunningly larger than demand in its home market. That could be a problem for everyone else who wants to make batteries. Source: FT.

Charging

Who Are The Group of Seven? For a while, it looked like everyone would join Tesla’s Supercharger Network. But Stellantis, GM, BMW, Mercedes, Honda, Kia and Hyundai have a different plan. What will they name the new partnership? And will it work? Via John Voelcker. Link

New Developments / Milestones

EV Boom In Israel. EVs now account for 16% of new car sales in Israel, up from just 3% in 2021. Israel may be an early indicator for Chinese success in Europe. Through August 2023, BYD is winning. Geometry is placing. And Tesla is showing. Link

Polestar: China’s Leading EV In America: Polestar quietly exported 10,000 Polestar 2s to America last year. In 2024, the company will start production of the Polestar 3 SUV in South Carolina. Link

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Coming Up: Driving With Dunne Podcast - September Guests

• Tony Posawatz, CEO, Fermata Energy

• David Barboza, Pulitzer Prize Winner, New York Times, The Wire-China.

• Wendy Cutler, Vice President, Asia Society Policy Institute (ASPI)

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And…Your Weekly Modicum of Wisdom

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– Coco Chanel