Chinese EV Makers Target European Markets with Affordable, High-Rate Cars

Chinese electric vehicle (EV) manufacturers are determined to win over European drivers and corporate customers with more affordable vehicles that come with high safety ratings and many high-tech features.

In the past few months, several Chinese EVs have received European New Car Assessment Program (NCAP) ratings of five stars – an achievement that requires loading vehicles with active and unchanged safety features that go beyond legal requirements.

More to come.

“All Chinese EV manufacturers want to achieve five-star Euro NCAP ratings to be able to compete in the European market,” said Brian Gu, president of Chinese EV manufacturer Xpeng.

Gu said Xpeng has spent the past three years building stores and service centers in Denmark, the Netherlands, Norway and Sweden — with the first sale in Norway — ahead of next year’s official launch of its electric car P7 sedan and G9. (SUV) in four countries.

Chinese EV makers have realized that safety is a very important part of the sales process, said Matthew Avery, director of Thatcham Research, a British car research institute funded by insurers and a member of the Euro NCAP board.

The five-star Euro NCAP ratings are seen as key to overcoming residual concerns in Europe about the quality of cars made in China, after poor crash test failures in 2006 and 2007 created the impression that Chinese cars are unsafe.

Perhaps most important to sales, the high safety ratings also open up the market for potential Chinese EV makers’ corporate vehicles.

Auto sales make up nearly half of all vehicle sales in major markets including Germany, France and the United Kingdom, and many corporate buyers place a high priority on safety.

“Buying a car is very important and a lot of cars have a five-star rating that is mandatory to buy a car,” said Avery.

car rental companies

In addition, many airlines want to switch to EVs quickly to meet sustainability goals. But fleets of companies have struggled to find enough EVs in Europe as supply chain problems have pushed waiting times for some models to more than 12 months.

High demand for electric vehicles amid supply chain shortages has allowed European automakers to raise EV prices and focus more on retail customers, rather than customers such as car rental firms that have previously made little profit.

That has created an opportunity for Chinese EV makers who have already stolen a march on many foreign rivals in China, the world’s largest market for EVs.

In October, for example, German car rental company Sixt said it would buy up to 100,000 EVs from BYD, starting with its Atto 3 SUV that received a five-star Euro NCAP rating the same month.

China’s Great Wall Motors (GWM) received five-star ratings in September for its WEY Coffee 01 hybrid SUV and its ORA-branded Funky Cat electric sedan.

European automakers are also pursuing five-star ratings for their EVs and hybrids, from the BMW iX to Volkswagen’s ID.4 and ID.5. In October, Mercedes received a top rating for its EQE sedan and its driver assistance features received the highest marks so far in Euro NCAP.

Chinese EV company Aiways has not yet been able to use its U6 electric car in its NCAP ratings but is also set to take the lead, said Alexander Klose, who heads the automaker’s operations outside of China.

He said that Aiways has invested in other safety equipment so that the U6 can open sales opportunities to European companies, including car rental companies, when it starts selling next year.

“There will be a natural demand for vehicles like ours that are fully equipped and come at very competitive prices,” he said, adding that Aiways hopes to sell 30,000 EVs in Europe by 2023, up from around 5,000 this year.

A basic requirement

French auto consultant Inovev said about 155,000 cars made in China were sold in Europe in the first nine months of 2022, or 1.4 percent of the market. Chinese companies are on track to drive 150,000 cars this year, almost double the 80,000 sold in 2021.

But almost half of Chinese cars sold were EVs, according to Inovav, giving them a 5.8 percent share of the European fully electric vehicle market.

Inovav vice president Jamel Taganza said all Chinese cars sold in Europe will be EVs within a few years, with more affordable models on the way.

By 2030, Inovev estimates that EVs will account for 40 percent of European new car purchases and that Chinese brands will represent between 12.5 percent and 20 percent of that fully electric market, with sales of between 725,000 and -1.16 million.

“This is a strong prediction,” Taganza said. “But it could grow very quickly, especially if European automakers don’t respond to European demand for affordable EVs.”

Getting a five-star rating is expensive for automakers because it means investing in other safety features from extra airbags to collision avoidance, driver assistance systems and driver monitoring systems.

Thatcham’s Avery said that Chinese EV manufacturers are fully engaged with Euro NCAP and are willing to invest the money needed to achieve high ratings.

“Forget what you might think the Chinese mean by low quality or low security,” he said. “Their quality is now better than others.”

BYD is launching three cars in several European markets and will add more models and markets next year, all of which should have high safety ratings, said Michael Shu, managing director of BYD Europe.

“We think a five-star rating should be a basic requirement,” he said.

‘Using that advantage’

Meanwhile, Great Wall Motor’s ORA Funky Cat will be launched in Britain, Germany, Ireland and Sweden later this year.

Starting at around GBP 32,000 (approx. Rs. 3,088,450) in the UK, or around GBP 5,000 (approx. Rs. 4,82,600) cheaper than the VW ID.3, the Funky Cat’s features include facial recognition to save seat preferences, driver assistance systems camera and wireless phone charging.

Mr Toby Marshall, from the UK, who is in charge of sales and marketing at GWM’s company, ORA, said that if a car is well made, has many features, has a high level of safety and has a satisfactory price, it doesn’t matter where it was built.

“Those are the key ingredients that are important to car buyers,” said Marshall, as he showed off the Funky Cat at his office in Solihull in central England.

Bill Russo, head of Automobility in Shanghai, said the problem with many international automakers is that they are giving an advantage to Chinese rivals when it comes to building low-cost EVs.

“The only place in the world you’ll find an affordable EV today is China,” Russo said. “And they’re taking advantage of that.”

© Thomson Reuters 2022

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