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ℹ️ The article was first published on LinkedIn on 03.10.2023.

Welcome to the second edition of China EV Pulse.

I'm thrilled to have you join me on this exciting journey. My mission with this Newsletter? To provide comprehensive insights into Chinese automotive brands and manufacturers in Europe. You can anticipate regular editions, richly detailed with information on the market, technologies, and the evolving dynamics of this segment.

As with our previous edition, I'm kicking off this one with insights from an industry expert. Your suggestions shape this space, so if there's a specialist you'd love to see featured, slide into my DMs.

Stay plugged in, and let's navigate the future together. Take your time to read it or skim through it. And if you like, share the newsletter!

I'm honored to welcome Alexander Klose, Executive Vice President of Overseas Operations at Aiways, who will be addressing questions related to Aiways and their start in Europe.

Dr. Klose, can you shed light on Aiways' approach to establishing a foothold in Europe?

Our approach for Aiways is that we try to open Markets together with a local partner and then operate them. This does not have to be the same partner throughout Europe, for example we have the multi-brand dealer Astara in Spain and the company Koelliker in Italy. These partners, carefully selected by us, operate "their" country on their own responsibility for sales, service but also marketing and PR, but are supported technically and communicatively by us from Munich. This makes it easy and, above all, fast to scale the business and open up new markets.

All communication is handled by the Overseas Headquarters in Munich, so the channels are only European; communication with the headquarters in China is exclusively been done between Aiways Europe in Munich and Shanghai only.

How crucial are distribution and service networks for Aiways, particularly in a competitive market like Germany? Do you view these networks as differentiators influencing consumers' choice of manufacturer, or are they more of hygiene factors?

Service and sales are the decisive factors for success. If that doesn't work, you can't be successful on the market. The service and aftersales area of Aiways is covered by ATU within Germany and works smoothly. We are very satisfied with the partnership. in terms of sales, we are currently restructuring our sales organisation, partly because we have seen that customers - still - like to go to a traditional car dealership to buy a vehicle. This does not mean, however, that we are giving up the chosen path of direct marketing via our website.

We will only add a "classic" vehicle marketer. We are in the final stages of negotiations and hope to be able to announce a partner soon. The topic of buying Aiways vehicles from electronics retailers has not yet been closed for us, because individual retailers of the former sales partner still want to sell Aiways vehicles and we are in talks with them. Since these dealers are individual merchants, this is possible without any problems. It is indisputable that most customers want to take a physical test drive with our vehicles. We will continue to make this possible and ensure it.

Based on feedback from European consumers, are there specific adaptations or innovations that Aiways is considering for its European models?

A lot, in fact. We get weekly feedback, both from our partners in the European markets and directly from end customers. We try to implement the adjustments that make sense directly. For this purpose, we have founded a Tech Centre in Munich, which deals with electronic and software-driven questions and improvements and implements them.

But unnecessary things are also removed after customer feedback. For example, the automatic parking assistent in the Aiways U6 SUV coupé will be dropped in series production. A low single-digit percentage of our customers use this function, even at irregular intervals, all other report that they don´t need this function. Therefore, we will deactivate this function - saving complex computing power and additional money. We can pass these benefits on to our customers in the long run.

Have you observed a shift in the reception of Chinese manufacturers like Aiways in Europe over the past 18 months? If so, in what ways?

Yes, of course. We are being noticed! Even the EU President felt compelled to mention electric cars from China in her last keynote speech, albeit negatively. However, we place think this is the beginning election campaign and continue to believe in open, free and fair trade. After all, what we really want is for the necessary switch to electromobility to be affordable....

Of course, we also see that some of our competitors from China, who are slowly gaining a foothold in Europe, are now facing similar tasks and problems as we did two years ago. It is not only about good-looking, technically flawless and technologically state-of-the-art products, but also about the aftersales network, the appropriate service stations and the conversion to European adaptations. This is not as easy as some people make it out to be.

Only marketing spendings, nice pictures and advertising messages are not enough. The customer wants security, he wants a contact person, he wants to know where the vehicle can be taken for service and the issue of resale is very important. These are challenges that we all have to face.

Nevertheless, I believe that Chinese manufacturers will follow the same path as American, Japanese and Korean manufacturers did before and that adoption will increase rapidly. The difference is that it will be much faster than in the past, because development cycles and news have rapidly increased in speed.

How do you foresee the trajectory of Aiways and other Chinese EV brands in Europe over the next two years?

We will see a lot of brands coming and also going, We will see that chinese tech will be benchmark for all OEM and we will see Aiways! We came here to stay.

Henning Krogh and Beatrice Bohlig spoke with Spiros Fotinos about Zeekr and their upcoming Zeekr X for the european market. Discussing the German market, Fortinos underscores its significance, given its mature audience with a deep understanding of cars. He notes the positive response to the preorders in Germany, even before potential customers have had a firsthand experience of the car.

When asked about the business outlook for 2024, he mentions the consistent growth observed in the European car industry for the past 13 months. He expects this trend to continue in 2024, although the industry still has a way to go to reach pre-COVID levels.

GAC disclosed the sales data for its pure EV brand, Aion, for the month of September on October 1st. Aion delivered 51,596 new vehicles in September 2023. The sales this month increased by 72% year-on-year and 15% month-on-month.

Leapmotor saw record deliveries last month, after it had a small drop in deliveries in August. Leapmotor delivered a record 15,800 vehicles in September, up 43.13 percent year-on-year and up 11.35 percent from 14,190 in August, according to data it released today.

Li Auto showcasing a substantial year-on-year increase of 212.7% and up 3.3% month-on-month. The company delivered 36,060 new cars in September, marking a historic high for monthly deliveries since its inception.

Chinese electric vehicle startup Neta Auto delivered 13,211 vehicles in September, up 9.15 percent from August but down 26.63 percent year-on-year, according to figures it released today.

Nio reported that it delivered 15.641 EVs during september. This marks a year-on-year increase of 43.8%. However, compared to the previous month, Nio’s September deliveries saw a decline of 19.1%.

Xpeng Motors has also reported delivery figures for September. According to the company’s announcement on October 1, Xpeng Motors delivered 15,310 new electric vehicles during the month, marking a year-on-year increase of 81% and representing a month-on-month increase of 12%.

Zeekr delivered 12,053 vehicles in September, up 45.64 percent year-on-year but down 2.03 percent from August, according to data released by the company today.

Geely Holding Group's EV arm, Zeekr, aims for an ambitious $18 billion valuation in its forthcoming US IPO, a figure that has surprised many, as reported by Jiemian. Zeekr's valuation mirrors Nio's current market cap and surpasses Xpeng's recent valuation, despite Xpeng's backing from Volkswagen. Initial discussions hint at a possible flexibility in this valuation, as the communication process is still in its early stages.

In December 2022, a confidential draft registration statement for a possible IPO was filed with the US SEC. Early this year, Zeekr clinched $750 million in Series A funding from five investors, pushing its valuation to $13 billion. The brand's vision is to achieve sales of 650,000 units annually by 2025, aiming to command a significant presence in the premium EV sector.

The European roads witnessed an influx of over 100,000 electric vehicles (EVs) from Chinese brands in the first two-thirds of the year, marking a 150% rise compared to the previous year. Leading this invasion are brands like SAIC's MG, Geely's Polestar, BYD, and ten other emerging Chinese brands including Nio, Aiways, Ora, XPeng, and FAW's Hongqi.

Furthermore, EVs manufactured in China but branded otherwise for the Western European market approach a staggering 0.27 million, capturing 22% of the entire EV shipments in the region. Of these, 164,400 bear non-Chinese brand tags. Notably, over 60% of the EVs exported from China to Western Europe during the first eight months of 2023 carried western brand labels, with Tesla accounting for a speculated majority, followed by renowned brands like Renault (inclusive of Dacia/Mobilize), BMW, and Honda.

Chinese car brands are making a notable entrance into Europe, predominantly with electric vehicles. In light of this shift, Nuremberg-based market research firm Puls surveyed German car buyers to gauge their awareness of 22 leading Chinese car brands.

Six brands notably stood out in the survey. Topping the list is Polestar, affiliated with the Geely conglomerate and Volvo, with an impressive 37% brand recognition. Following closely are MG (once British but now part of the SAIC Group) and BYD at 21%.

Nio, Lynk & Co (also under Geely), and Geely itself have recognition levels of 16%, 15%, and 13% respectively. Other brands like Aiways, Great Wall, Xpeng, Ora (a Great Wall brand), and Chery lag significantly behind.

Interestingly, the research indicated a strong correlation between brand recognition and purchasing interest for these Chinese brands. On average, 1 in 5 individuals familiar with a Chinese car brand expressed a genuine interest in purchasing.

China recently confirmed its intention to continue with its national DC fast-charging standard, a significant move in a market that represents not only the world's largest new car segment but also the most substantial demand for electric vehicles.

In mid-September, three core aspects of ChaoJi-1, the next iteration of the GB/T charging standard currently in use in China, received approval from the country's regulatory authorities. These officials released documents outlining general requirements, communication protocols between charging stations and EVs, and connector requirements.

The latest version of the GB/T standard targets high-power charging, supporting up to 1.2 Megawatts. A new DC control circuit will also be introduced for enhanced safety during charging. Interestingly, ChaoJi-1 is designed to be compatible with CHAdeMO 3.1, the latest version of the now somewhat sidelined CHAdeMO standard, which many global automakers have abandoned.

China's choice to develop its fast-charging standard, ensuring compatibility with the dwindling CHAdeMO, underscores the strategic importance China places on this sector. With Europe and the US charting their own paths, it remains intriguing to see how these diverse standards will fare in the interconnected realm of electric mobility.

Ursula von der Leyen, the President of the European Commission, recently announced an intention to scrutinize subsidies provided by China to its electric car manufacturers. There's concern over a potential competitive distortion disadvantaging European manufacturers, leading to possible tariffs on Chinese electric cars.

However, Germany's Transport Minister, Volker Wissing, and the German Association of the Automotive Industry (VDA) have expressed skepticism over such tariffs.

Wissing voiced his opposition to creating market barriers, calling the EUs approach risky. He stressed the need for Europe to make its electric vehicles competitive on the global stage. Wissing warned of a potential spiral of retaliatory sanctions, which could start with cars and eventually extend to other industries, impoverishing the world.

The VDA echoed Wissings concerns, emphasizing the importance of the right conditions for the auto industry to remain competitive. The organization also warned of potential countermeasures by China. Many German automakers operate in China, some through joint ventures, and could be affected by retaliatory tariffs.

The EU Commission's drive appears to prevent another downfall similar to Europes solar industry due to China's alleged unfair trade practices. European manufacturers have been losing ground in China, and many Chinese manufacturers, both private and state-supported, are making inroads into Europe.

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Sebastian | China EV Pulse