Munich, Dusseldorf Brazen copies, poor quality: Chinese car manufacturers still have a dubious reputation in Germany today. The pictures of when a door handle fell off at the IAA trade fair in 2005 in a country wind are still too present for many. There are also chilling examples in the recent past – from the Zotye SR9, a cheap clone of the Porsche Macan, to the Suda SA01, which completely failed the ADAC crash test in early 2021.
But such miserable results have long been the exception. The learning curve of the Chinese is “extremely steep”, states a top manager from Mercedes-Benz. And with the boom in electric drives, the once-spurned competition is now gradually taking off in Europe.
According to data from the analysis company Jato Dynamics, vehicle manufacturers from China were able to more than double their sales in the EU, Great Britain, Norway and Switzerland last year – to around 66,000 units. In January and February, the Chinese continued to grow with almost 13,000 vehicles delivered in Europe. This corresponds to an increase of 167 percent.
Actually, the values should be even higher, at least in absolute numbers. Because Jato Dynamics shows the models from Polestar and Lynk & Co, all of which are produced in China, separately in its invoice with Volvo at the parent company Geely. If these deliveries by Polestar and Lynk in Europe are taken into account, the Chinese carmakers have already sold more than 93,000 cars in 2021 and almost 19,000 bodies in the first two months of this year.
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All in all, the Chinese now have a market share of a good 1.2 percent on the continent. This is still manageable. But the growth rate of the group is remarkable. And unlike in the past, the new Chinese attackers are “very serious competitors,” states Ferdinand Dudenhöffer, head of the Center Automotive Research (CAR). “Almost without exception, they come with fully electric cars or plug-in hybrids and lots of software functions.”
The companies from the People’s Republic are trying to conquer the market with a “multi-phase model”, observes Dudenhöffer. The industry expert divides the currently rolling wave of attacks by the Chinese into three groups.
The companies from the first category follow the usual path in the mass market. They primarily include state car manufacturers such as SAIC, which stand behind brands such as MG and appeal to cost-conscious customers. The second group is in hybrid mode. It’s about vehicles that are created in cooperation with Western partners. One example here is the small car brand Smart, which Mercedes now wants to lead to success together with Geely from China.
State of the art in software
The third group consists of start-ups such as Nio or Xpeng as well as premium brands à la Wey from established manufacturers such as Great Wall. Their vehicles impress with sophisticated solutions for entertainment and automated driving. In part, they would redefine the state of the art in the software sector, says Dudenhöffer. “This means that the premium Chinese are closer to Tesla than to Stellantis or Toyota, for example.”
The first new Chinese electric start-up to launch a vehicle in Europe was Aiways. The Shanghai-based company delivered the first units of its mid-size SUV U5 at the end of 2020. For less than 40,000 euros, customers get around 400 kilometers of electric range and modern assistance systems.
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“The perception of Chinese car brands is changing massively,” says Alexander Klose, Executive Vice President Overseas at Aiways. An enormous amount of know-how has been built up in the People’s Republic in recent years through the joint ventures between German car manufacturers and local Chinese suppliers. “The majority of our engineering staff was previously active in such joint ventures. That European influence is now evident in design and quality.”
Klose is a veteran in the auto industry. The manager has already worked for BMW, Ford or Volvo. When it comes to Airways and other Chinese vehicle manufacturers, he notices the high demands that the companies place on themselves. “Therefore, the vehicles will establish themselves in Europe much faster than was the case with suppliers from Japan or Korea a few years ago.”
With the U5, Aiways was the first Chinese start-up to bring an electric car to the European market.
(Foto: Aiways)
According to Aiways, it was able to deliver more than 3,000 vehicles across Europe in 2021. This year, the company expects sales in the five-digit range. By 2024, sales in Europe should already be in the six-digit range, partly because the manufacturer wants to launch a new model every year. In the fourth quarter of 2022, for example, the market launch of the U6, an electric SUV in coupé form, is planned in Germany.
Nio is worth more than $33 billion
From the end of the year, the Nio ET7 should also be available in Germany, a fully electric luxury sedan with a range of a good 700 kilometers. Nio is considered one of the greatest hopes of the Chinese auto industry. The start-up is already worth more than $33 billion on the stock market.
A look at the technology shows that Nio is at least on an equal footing with German manufacturers. The vehicles will be equipped with lidar sensors, and the central computer for automated driving in the ET7 already uses the chips from Nvidia that Mercedes will not install in its vehicles until 2024.
>>Read also: For German car manufacturers, the golden days in China are over
According to their own statements, the software for automated driving is also an in-house development by Nio, as is the voice assistant Nomi. This means that Nio has a higher share of in-house development for important components of the software than many German car manufacturers.
Xpeng already offers its vehicles in Norway. With the P7, the Chinese start-up has a direct competitor to the ET7 from Nio in its range. The latest chip generation from Nvidia is also used in Xpeng. Converted into euros, the P7 is offered in Norway for 46,500 euros. After Norway, Xpeng will also be launched in Sweden, Denmark and the Netherlands this year. There is no start date for Germany yet.
Probably the biggest competitor from China is called BYD. In China, BYD has already overtaken its competitor Volkswagen in electric cars. While VW sold around 93,000 electric cars in China last year with great difficulty, BYD sold over 320,000 units. So far, only one model is available in Europe, the SUV Tang. Since sales started in Norway in August 2021, BYD has already sold around 1000 vehicles in the comparatively small country.
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