Great Wall Motors Strategy for Conquering Europe

ℹ️ The article was first published on LinkedIn on 31.10.2023.

Welcome to the fourth edition of China EV Pulse!

It's incredible to see the enthusiasm and commitment from each of you as we delve deeper into the electrifying world of Chinese automotive ventures in Europe.

My mission remains steadfast: to deliver in-depth insights into the Chinese EV landscape, showcasing the latest market trends, technological innovations, and the dynamic interplay within this vibrant sector.

Building on the momentum of our previous editions, we're once again setting the stage with valuable perspectives from a seasoned industry connoisseur. Remember, this newsletter is shaped by your curiosity and suggestions. If there's an expert or topic you're eager to learn about, don't hesitate to reach out directly to me.

Let's drive into the future together, with the fourth issue of China EV Pulse in your hands. Enjoy the read!

I'm honored to welcome Philipp-Maximilian Kemmler-Erdmannsdorffer, Head of Communications & Public Affairs Europe Great Wall Motor Deutschland, who will be addressing questions related to Great Wall Motor (GWM) and their plans for Europe.

How does Great Wall Motor plan to establish itself in an already saturated European market, especially given the strong presence of established automobile manufacturers?

I think a big challenge for a new company in the European market is still that it is so diverse. There is simply no single European market as such and each country has its own particularities and peculiarities, not like the USA or China, for example, which can be seen as a more or less uniform economic area.

Nevertheless, new opportunities are being created in Europe through the mobility revolution and the steep increase in electromobility, and spaces are being opened up that offer great market opportunities for new players. But the window of opportunity is now already starting to close again, and we will see who can ultimately hold their own in the market in the long term.

GWM certainly has two factors playing into its hands here: on the one hand, with over thirty years of car manufacturing, it has a lot of experience and high quality and technology standards in production; on the other hand, when it comes to selling its products in the individual markets, it relies on strong partners who naturally know their business, but also their markets in particular, inside out.

What distinguishes Great Wall Motor and its brands Wey and Ora from other Chinese and European electric car brands already present in Europe?

GWM's goal is to enable its customers to use the products as simply and as carefree as possible, without compromising safety or technological development in the vehicle. This begins with the purchase of the products and continues throughout their entire service life.

In the case of WEY, there is an additional aspect. The vehicles are plug-in hybrids, with the special feature that the electric motor is always the primary factor, and the electric range of over 130 kilometers allows most journeys to be made purely electrically. It is actually an electric car with range extension by an internal combustion engine. Adjusted for equipment, customers get a lot of product for their investment.

In the end, it will also show which manufacturer can convince the most customers with its offer and product range.

How is Great Wall Motor addressing the growing competition in the Chinese market, especially with the introduction of new electric car brands almost daily?

Currently, new energy vehicles have reached a critical mass in China. A grueling price war is definitely not a long-term solution. Only when enterprises stick to the long term and keep the NEV system alive can they move forward. For Great Wall Motor, behind the long-term are technological development reserves, forward-looking product design, forward-looking technological planning, management and business model development, and end customer confidence.

In terms of technological reserves, we believe new energy and intelligentization are indispensable. In the field of new energy, Great Wall Motor has set the strategy of parallel development of hybrid, pure electric and hydrogen energy and parallel development of multiple technology routes (technology assets).

Great Wall Motor is the only company in China and the only company in the world that has flattened, networked and decentralized the entire industrial chain in the two main areas of energy and intelligence, built the industry-leading energy system of "photovoltaic+distributed energy storage+centralized energy storage" and completed the energy system of "solar energy-battery-hydrogen energy-vehicle propulsion".

How does Great Wall Motor assess the role of E-Fuels in the future energy landscape, especially in comparison to pure electric vehicles and hydrogen technology?

The goal of GWM's research and development in the field of NEV is to be as open to development and technology as possible. Different paths can lead to the goal in the end. GWM therefore invests in research in all areas and does not limit itself to the development of BEVs. Hydrogen, solid-state batteries and the development of e-fuels all play a role here; further development will show what will prevail in the interest of sustainable mobility.

Li Auto introduced the impressive charging capabilities of their new electric minivan, the Li Mega. The vehicle boasts a peak charging power of 552 kW, allowing it to maintain a rapid charge even when the battery is 80% full, at a rate of 315 kW.

A video demonstrated the Li Mega being charged from 10% to 80% in just 10 minutes. When charging from 6% to 80%, it took only 11 minutes and 2 seconds, translating to a replenishment of 77.3 kWh. Up to the 60% battery level, the Li Mega was able to absorb no less than 400 kW, and beyond 80%, it still managed to pull in over 300 kW, maintaining 315 kW even past this point.

This remarkable charging speed surpasses the previous record held by the Xpeng G9, which could charge at a maximum of 445 kW. It also outperforms the Lotus Eletre, which peaks at 430 kW, and the Porsche Taycan, which tops out at 270 kW.

BYD has reported a substantial profit increase in Q3, reinforcing its status as China’s leading new energy vehicle manufacturer. The company's Q3 revenue hit a new high of RMB 162.15 billion, a jump of over 38% from the previous year. Net profit surged to RMB 10.41 billion, marking an 82% increase year-on-year, while gross margins climbed to 22.12%, the highest in two years. The earnings per share rose by approximately 82% from the previous year, and vehicle sales also saw a significant uptick with over 824,000 NEVs sold in Q3 alone.

The company's overall sales for the first three quarters topped 2 million units, with a year-on-year increase of over 76%. Analysts attribute this stellar performance to BYD's scale advantages and stronger bargaining power within the supply chain.

Nio is contemplating a network of dealerships across Europe, diverging from its direct-sales model. This move comes as Nios European sales have been below expectations. Although the company is facing financial pressures from heavy investment in research and battery-swapping infrastructure in China, it has not officially changed its sales strategy in Europe.

Initially launching in Norway with a lease-only model, Nio expanded to offer outright purchases in late 2022. Unlike its direct-sales method akin to Tesla in China, Nio is exploring a dealership model similar to fellow Chinese carmakers BYD and Xpeng in foreign markets.

At the Green Auto Summit in Stuttgart, a whirlwind of intriguing discussions and presentations took place. Among them, one speaker truly captivated the audience: Dr. Alexander Klose, the Executive Vice President of Overseas Operations at Aiways, an emerging Chinese electric vehicle manufacturer.

"The worlds mobility landscape is undergoing a seismic shift, and China is at the forefront of this revolution," Dr. Klose initiated with vigor. He highlighted that China has witnessed a rapid urbanization in recent years, leading to a surge in vehicle numbers. But now, he declared, "a significant pivot towards electromobility is becoming increasingly evident."

Dr. Klose shared anecdotes from his latest trip to China, expressing his astonishment at the transformation unfolding on the streets. "Between 2005 and 2010, there was a boom in car ownership. But now, you see the tide turning towards electric. This is partly due to urbanization, but also policy shifts and industry innovations."

He touched on a fascinating point about the role of software in modern vehicles. "When I booted up my first car in China back in 2006, software was barely a footnote. Today, everything hinges on it." Klose also delved into the challenges that traditional car manufacturers, especially in Europe, are facing. "Chinese makers are entering the market with affordable electric vehicles, while many European makers are still pushing pricier models. This is putting the traditional players under immense pressure."

Another intriguing aspect was his discussion on the production of electric vehicles. "We need to drive down production costs to make electric vehicles appealing for the mass market. In China, we're already seeing strides in this direction, thanks to our high production volumes and the integration of technology into the manufacturing process."

In his concluding remarks, Dr. Klose underscored the importance of adaptability in this rapidly evolving industry. "There's no definitive roadmap to the future. As manufacturers, we must be agile and adjust to what the market demands of us."

Desay SV, an antenna and infotainment supplier based in Weimar, Thuringia, is expanding its local manufacturing and development capabilities, including setting up an optical lab and planning to establish a display manufacturing operation within the EU.

Desay SV Europe is tapping into the demand from European automakers for advanced infotainment systems, with a focus on displays that offer a unique user experience in terms of operation, design, and information presentation. The company is a market leader in China with significant market shares in both display and infotainment solutions.

The company is also pioneering local engineering and testing capabilities for displays in Germany. Its Weimar-based operation is setting up a state-of-the-art optical lab to facilitate faster response times and closer collaboration with European customers. The displays from Desay SV are featured in vehicles such as the Omoda E5.

Stellantis NV is set to channel €1.5 billion into acquiring a 20% share of Chinese electric vehicle manufacturer Leapmotor. Plans are underway for Stellantis to commence exporting Leapmotor vehicles to the European Union in late 2024, with an eye on the U.S. market at a later date. These vehicles will be produced in Stellantiss global factories, including potential U.S. sites to sidestep steep import tariffs, as outlined by CEO Carlos Tavares.

The two automakers will establish a joint venture, Leapmotor International, with Stellantis holding a majority stake of 51%. This new entity will exclusively manage the production and exportation of Leapmotor vehicles outside China, whereas sales and manufacturing within China remain Leapmotors responsibility. This partnership is expected to launch Leapmotor onto the European stage within two years.

China has announced stricter export controls on graphite products, essential for battery manufacturing, effective from December 1. These measures, mandating official export permissions, aim to safeguard global supply chains and national security. As the leading producer and exporter of graphite, China processes most of the material used in electric vehicle batteries and other industries. Major importers of Chinese graphite include Japan, the U.S., India, and South Korea. The restrictions are speculated to be a response to international political tensions, particularly with U.S. technology sanctions and potential EU anti-dumping duties.

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Sebastian | China EV Pulse