However, the best-selling cars remain gasoline cars. Their share is over 36%. Hybrid vehicles reached second place with a share of approximately 24%. Manufacturers from China are especially influencing this trend because more and more electric cars are coming from the Middle Kingdom.
Low production Costs and protective Duties
In contrast to products from the consumer electronics sector, Europe, but especially Germany in the case of cars, traditionally looks back on considerable gains in foreign trade. Although German car manufacturers sold a total of about 4.4 million vehicles in China last year, there were only 200,000 in the booming electricity market. It is noteworthy that the number of electric vehicles in the Chinese automobile market, the world’s most important one, increased by 5.7 million.
European car producers also import electric cars from their production sites in China to Europe. One example is the BMW iX3, which is manufactured exclusively in Shenyang. But what is the reason for the high demand for Chinese cars and the rather stagnant demand by European manufacturers?
Companies such as BMW benefit from low production costs on the ground, and there are no expensive protective duties like on European exports to the US or China. Europe will soon import more cars than it exports, according to consulting firm PwC. It is possible that seven-digit quantities will be delivered annually from the People´s Republic to Europe before 2030.
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Favourable Framework Conditions
The success of Chinese electric cars is another factor that could reverse the export-import ratio. It also contributes to the relocation of production to the Far East. According to Patrick Koller, the head of the French supplier Forvia, wage and development costs are below the European average. In recent years, electricity prices have increased considerably in Europe. Thus, comparable products from Chinese manufacturers have become more affordable and, therefore, more attractive. The first cheap electric cars have already been announced for the German market.
The shortage of semiconductors and rising energy prices have made the production of electric cars in Germany more difficult and expensive in the last two years. People’s Republican car manufacturers were less affected by the problems and were able to produce cheaper cars.
Europe: More Money for Research
Already now, unknown brands such as BYD, Geely, Nio, Xpeng, or Great Wall are launching their first products in Europe. Soon, this trend will gain great popularity. European producers with significant market shares are faced with this. This development was recently outlined in figures in the Allianz Trade Report: If Europe remains open to international e-vehicles in the future and China could increase its market share to 10% by 2030, German car manufacturers alone would lose about EUR 24 billion in added value.
The increasing market power of China and the declining market share of European automakers both have an impact on economic growth. In order to make better cuts, Germany and Europe should further expand the local production of semiconductors and battery cells and invest more money in research and development. Emmanuel Macron, the President of France, plans to reform the EU’s environmental bonus to only promote cars made in Europe. It is one of the ways to support the regional automotive industry.
