From Innovation to Domination

ℹ️ The article was first published on LinkedIn on 06.02.2024.

Welcome to the landmark tenth edition of China EV Pulse,

our tenth shared voyage into the heart of innovation. Your fervor and dedication to exploring the advancements in Chinas electric vehicle scene, especially within the European context, are profoundly inspiring.

I remain committed to providing you with thorough and enlightening coverage of the Chinese EV market, spotlighting the freshest trends, groundbreaking technologies, and the fluid dynamics of this electrifying sector.

Join me as we plunge deeper into the future of electric vehicles with this milestone issue of China EV Pulse. Enjoy your read!

The European Commission has initiated an investigation into Chinese automakers to consider whether to impose tariffs on electric vehicles (EVs) to protect European manufacturers. This move comes as EU inspectors plan to visit BYD, Geely, and SAIC in China amid concerns that state subsidies may give Chinese EV manufacturers an unfair advantage in the European market. This investigation follows the US's steps to implement measures against Chinese manufacturers, such as tax incentives for EVs using batteries without Chinese components.

China has accused Europe of protectionism in response to the investigation, escalating tensions between the two economies. The EU's efforts to reduce dependency on China, especially in light of its green transition and Beijings ties with Moscow, further complicate the relationship. China has retaliated by announcing investigations into imports such as European brandy.

China is implementing new guidelines to integrate electric vehicles (EVs) into the power grid, aiming to make them a key part of the public energy storage system by 2030. With the widespread adoption of EVs, using Vehicle-to-Grid (V2G) technology to stabilize the increasingly burdened power networks is seen as a crucial step towards more efficient energy use. The National Development and Reform Commission (NDRC) of China, along with three other government agencies, plans to establish a technical standardization system for vehicle-grid interaction by 2025. This includes developing a tariff system to encourage EV charging during off-peak hours.

Experts believe that over 60% of annual charging in cities and more than 80% at private stations could occur during these times. Pilot projects will further explore this potential by 2025, testing EVs as mobile energy storage solutions. By 2030, China aims for widespread V2G implementation, allowing EVs to provide several gigawatts of additional storage capacity to the grid for load regulation.

The automotive landscape in Europe is witnessing a significant influx of Chinese car manufacturers, sparking debates about the future of the industry. Amidst this, a competitive rivalry between China and South Korea is emerging, with both nations having similar ambitions to dominate the global automotive market. Brands like BYD, Geely, and SAIC are aiming to challenge the current leaders, Toyota and Volkswagen, with Hyundai already making strides to close the gap from its third-place position.

Chinese automakers, with a broad portfolio ranging from MG to SAICs numerous collaborations, are rapidly expanding their presence, focusing on electric and electrified vehicles. This expansion is marked by the creation of various sub-brands and models tailored for international markets, including Europe, where electric vehicles are gaining traction due to favorable policies and lower import tariffs.

The south corean Hyundai Group, with a more concentrated brand strategy involving Hyundai, Kia, and the luxury marque Genesis, is positioning itself as a formidable contender, aiming to become the global leader within this decade. The group's focus on fewer brands allows for a more distinct brand identity and design direction compared to the sprawling conglomerates of Chinese manufacturers.

While Chinese brands are gradually establishing their presence in Europe with electric models, the challenge remains in building brand recognition and competing in higher segments against established names. Hyundai Group, with its clear brand strategy and ambitious plans, seems a step ahead in this competitive landscape, leveraging its established brands and design prowess to make significant inroads in the global market.

The Chinese automotive industry started 2024 with notable developments, from impressive sales figures to innovative product launches. However, the growth in vehicle sales has not matched the previous year's pace. Aito, supported by Huawei, has seen remarkable success, delivering 32,973 vehicles in January, a 34.76% increase from the previous month, driven by the Wenjie M7 model. Despite Aitos success, BYD experienced a 40% decline in January sales compared to the previous month, with 201,493 vehicles sold. Leapmotor, another key player, saw a seasonal dip in January deliveries but plans to introduce extended range electric vehicles (EREVs) to capture more market share.

Li Auto reported a significant jump in January deliveries, with 31,165 units marking a 105.8% year-over-year growth. Neta Auto, a brand of Hozon Auto, was among the few to see an increase in January deliveries, with 10,032 vehicles delivered, a 66.76% increase from the previous year. Nio delivered 10,055 vehicles in January, an 18.2% increase from the previous year, despite a 44% drop from December. XPeng saw a notable decrease in January deliveries due to seasonal fluctuations, with 8,250 vehicles delivered. Zeekr reported a substantial increase in January deliveries, with 12,537 units, a 302% increase from the previous year, partly due to the launch of its second model, the Zeekr 009.

Following the abrupt end of EV subsidies in Germany at the start of the year, many electric vehicles are becoming more affordable, with automakers like Renault, Volkswagen, and Dacia already announcing significant price reductions for some of their all-electric models. Joining this trend, the Chinese car manufacturer Build Your Dreams (BYD) has also announced considerable price cuts for its models, including the Atto 3, Dolphin, and Seal, as reported by Ecomento. The BYD Atto 3, a compact SUV, will see a price reduction of about 15%, starting at €37,990, with no changes to its features. The Dolphin compact car will be around 8% cheaper, now priced from €32,990, and the Seal sedan will see a price reduction of over 5%, with new prices starting at €44,990.

Nio is now offering its customers in China the option to purchase batteries that were initially leased through its Battery-as-a-Service model. The company communicated this new option to its existing Chinese customers via the Nio app. The purchase price for a standard battery with a capacity of 70 or 75 kWh is set at 70,000 Yuan (approximately 9,000 Euros), while a larger 100 kWh battery costs 128,000 Yuan (about 16,500 Euros). Customers wishing to replace an existing battery with a new one will incur an additional fee of 3,000 Yuan (roughly 385 Euros).

The monthly rental fees for batteries in China are approximately 125 Euro for the smaller battery and 215 Euro for the larger long-range battery, meaning the costs would be offset in just over six years. However, previously paid rental fees are not refundable upon purchase, and buying the battery outright removes the option to swap a depleted battery for a fully charged one at Nios exchange stations.

At the end of 2023, the JAC Yiwei EV, the world's first mass-produced electric vehicle equipped with a sodium-ion battery, rolled off the production line in China. This model, produced by Anhui Jianghuai Automobile (JAC), began deliveries at the start of the year. The electric hatchback features cylindrical sodium-ion battery cells from Beijing-based HiNa Battery and incorporates Unitized Encapsulation Module technology, which uses a honeycomb design, offering an alternative to the battery structures seen in CATL's Cell-to-Pack or BYD's Blade battery.

In February 2023, JAC announced its intention to become the first automaker to launch an EV with a lithium-free sodium-ion battery, the Sehol E10X. This model boasted a 25 kWh battery capacity, an energy density of 120 Wh/kg (140 Wh/kg for individual cells), a charging speed of 3C to 4C (10% to 80% in 20 minutes), and a range of 252 km as per the Chinese CLTC cycle.

In China, the electric vehicle (EV) market is experiencing a slight shift as consumers increasingly opt for EVs equipped with range extenders, combining the benefits of electric propulsion with the extended range provided by a combustion engine. This approach, essentially the reverse of the plug-in hybrid concept, is gaining traction.

Li Auto, a Chinese EV manufacturer, has demonstrated success with this strategy. While planning to diversify its lineup with pure electric models, Li Auto continues to focus on range extender technology, targeting various market segments with new models. Leapmotor, another Chinese automaker, has also seen significant growth by incorporating range extenders into its portfolio, alongside pure electric models.

Other Chinese companies, including BYD, Geely, Dongfeng, technology giant Huawei, and battery manufacturer Catl, are developing models primarily powered by electric motors but supported by range extenders.

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Sebastian | China EV Pulse