Cutting-Edge Developments in China's EV Sector

ℹ️ The article was first published on LinkedIn on 26.03.2024.

Greetings in the vibrant twelfth edition of "China EV Pulse,"

as we embark on our twelfth exploration together. Your zeal and unwavering interest in the progress of Chinas electric vehicles across Europe fuel our journey. I am fervently dedicated to providing you with detailed and thought-provoking insights into the Chinese EV market, emphasizing the newest trends, pioneering technologies, and the fluid nature of this dynamic sector.

Let's venture together into the evolving landscape of electric vehicles with this latest installment of China EV Pulse. Enjoy your exploration!

BYD, a leading Chinese electric vehicle manufacturer, is set to strengthen its presence in Europe, aiming to become a European company rather than a Chinese company operating in Europe, according to BYD Europe CEO Michael Shu.

Despite competing globally with Tesla for the top spot in EV sales, BYDs vehicles are still a rare sight in Europe, a situation the company plans to change significantly and soon. With a new factory planned in Hungary expected to be operational by 2026, BYD aims to achieve a 5% market share in Europes EV sector even before the factory's completion.

Last year, BYD sold nearly 16,000 cars in Europe, accounting for just over 0.5% of its global sales of more than three million vehicles. The company plans to increase its European sales fivefold in the short term, leveraging its new freighter and brand presence as an official partner of the Football European Championship in Germany.

Tesla has scaled back production at its largest factory in China due to a current lack of demand for its vehicles, reports initially from Bloomberg followed by automotive outlets like CnEVpost and InsideEVs. The adjustment reduces the factorys operational days from 6.5 to 5 per week without altering the number of production hours per day, equating to about a 23% cut in production volume.

While the original Bloomberg report cites unofficial insider information, Tesla has not officially confirmed these changes. Earlier in February, there were plans to increase production, but recent weeks have seen a shift necessitating a decrease in output. Both Tesla Model 3 and Model Y are manufactured in Shanghai.

Volkswagen is set to introduce the fully electric SUV coupe, ID.Unyx, in China, essentially a rebranded Cupra Tavascan with a VW logo. The model, approved by Chinas Ministry of Industry and Information Technology (MIIT), is designed as a sibling model to the Cupra's electric crossover and will be available in both rear-wheel and all-wheel drive versions.

The VW ID.Unyx, a four-door five-seater, is built on VWs MEB platform, designed for electric vehicles within the Volkswagen Group. It is manufactured by Volkswagen Anhui, a joint venture between Volkswagen and Anhui Jianghuai Automobile Group (JAC), the former contract manufacturer for Nio, established in 2017. Volkswagen currently holds a 75% stake in the joint venture since 2020. The same facility producing the ID.Unyx also manufactures the Cupra Tavascan, which began production at the start of the year. While the Cupra is intended for export, the ID.Unyx will be sold in the Chinese domestic market.

Seres, a Chinese electric vehicle manufacturer influenced by American innovation, aims to break into the global top 10 luxury car brands by 2030. The company plans to export 50,000 vehicles by the end of the year, increasing this number to 200,000 within three years, and ultimately reaching 500,000 units by 2030.

Seres focuses on launching luxurious, smart, and comfortable SUVs, including the Seres 5, Seres 7, and Seres 9 models, aiming for a global presence. These models, ranging from pure electric vehicles to those equipped with range extenders, are set to cater to individual, family, and business needs with six models across these series launching globally by 2024.

At the recent EV100 Forum in China, the countrys visions for alternative drives and the automotive industry were a focal point, with local media covering the event and the opening speech by Shan Zhongde, the Deputy Minister for Industry and Information Technology.

He outlined Chinas commitment to innovation-driven development, aiming to enhance its leadership in scientific and technological innovation, talent development, and supply chain resilience and competitiveness. Efforts are needed to boost the development of chips, software, and operating systems, as well as to improve the adaptability, safety, and charging convenience of alternative drive vehicles, including advancements in battery development and autonomous driving. Despite challenges, the opportunities for alternative drive development in China are abundant, according to Shan.

To support the automotive industry optimally, Shan highlighted the need for further improvements in Chinas political system, including stronger industrial planning and investment guidance, curbing blind investments and redundant construction, and introducing regulations to accelerate electric vehicle production.

Several struggling electric vehicle manufacturers in China are getting a second chance thanks to support from technology giants and local governments, aligning with President Xi Jinpings vision of advanced technologies as a "new productive force."

Reviving these faltering EV makers is a risky bet in China's competitive automotive market, where only a third of the top twelve automakers met their sales targets last year due to intense price competition. Mixed signals from the government, with criticism of local authorities' excessive investments in the EV industry, add to the uncertainty. Whether these companies can make a successful comeback remains to be seen, as there's a risk they could become financial burdens for municipal budgets in the long term.

U.S. Energy Secretary Jennifer Granholm has expressed concern about the potential influx of Chinese electric vehicles into the North American market, advocating for increased incentives for EVs manufactured in the USA to counteract this threat. During an event in Washington, she highlighted the need to prevent the automotive industry from being overwhelmed by China, as had happened with solar panel technology previously. Granholm pointed out that the U.S. Inflation Reduction Act (IRA) and other programs could help American manufacturers lower EV prices, emphasizing the importance of making EVs affordable in light of China's substantial investments in the sector.

Both the U.S. and the European Union (EU) are investigating the impact of Chinese vehicle imports on national security and market competition. The U.S. Department of Commerce is examining whether the import of Chinese vehicles, which can collect sensitive data, might threaten national security. Meanwhile, in Europe, concerns are growing that inexpensive Chinese vehicles could flood the market, despite Chinese models currently holding a low market share in countries like Germany. The EU is even considering tariffs on Chinese vehicles due to unfair competition practices.

European automakers are watching these developments with concern, fearing that tariffs could spark a trade war with China, where many European manufacturers also have significant market presence. Such a scenario could have detrimental effects on European automakers.

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Sebastian | China EV Pulse