Chinese EV brands setting the global benchmark of industry

By Al Mayadeen English
Source: Agencies
22 Apr 2023 12:17

Chief of Tesla's branch Niro says their competitors are high-end producers such as German Mercedes and BMW.

A Zeekr 001 electric vehicle (EV) by Geely seen displayed at the Zeekr booth during a media day for the Auto Shanghai show in Shanghai, China, April 19, 2021. (Reuters)

The Shanghai Auto Show this year could be summed up in one conclusion; China is closing the chapter on internal combustion engines and has entered the era of electric vehicles at full speed.

Citing industry insiders, AFP reported that Chinese brands are pioneering change across the sector, leaving foreign competitors struggling to catch up.

Local companies have dominated the Chinese EV market - the largest in the world - amid government support and a broad consumer pivot to greener options and are now planning to expand overseas.

The auto show revealed that Chinese brands "can compete with all of the legacy automakers in every way -- performance, quality, comfort, there's nothing they can't do," said EV expert Elliot Richards.

"I saw a lot of worried-looking German men wandering around," Richards added jokingly.

"I think this show marks the end of the internal combustion engine and the beginning of the EV era."

EV firms have set their eyes on not only being a greener option but also a direct competitor to high-end petrol-car makers.

"We regard high-end petrol vehicles such as BMW, Mercedes Benz, and Audi as our main competitors," William Li, CEO of Nio - the Chinese branch of Tesla - told AFP.

EV sales hiked by 94% between 2021 and 2022, the China Association of Automobile Manufacturers said, noting that electric vehicles recorded a quarter of all sales in 2022.

Li believed that domestic EV shares could grow by 40% this year, despite some decline in global sales in the sector.

"The future is very much here now," Mike Johnstone, a top executive at British luxury brand Lotus, told AFP.

"There's a lot of proliferation of electrified products (in China), and it's changing the entire market."

'Untouchable'

China has dedicated massive resources to developing technologies relevant to the sector since the early 2000s.

Billions of subsidies and incentives gave Chinese auto-makers a significant headstart against foreign competitors.

"They skipped developing petrol engines because they can't compete with the rest of the world," stated Richards.

"So they thought: '(With EVs) we can get a head start in front of everyone else'."

"It's ingrained in the nature of the country's economic system: the Chinese government is very good at focusing resources on the industries it wants to grow," Zeyi Yang wrote in MIT Technology Review.

The Chinese government had also built a huge infrastructure to support EVs, including 5.8 million charging ports across the country, and has set public transport contracts for EV firms.

The whole of the United States has fewer public charging docks than Guangdong province alone, which has almost three times as much, according to a Bloomberg report.

"In general, there are still a lot of preferential policies... for the production and sale of electric vehicles," said Li, citing expensive license plate fees in some Chinese cities as an example.

China leads the game

The industry environment and regulations set by the government have drawn further foreign attraction to the Chinese market, luring in EV giants such as Tesla, which has boosted the domestic sector's competitiveness and attractiveness against foreign firms.

Chinese EV industry has successfully broken the cost barrier, enabling average consumers to afford an electric vehicle without being burdened by loans.

China's Geely exhibited its Panda Mini in the Shanghai expedition, costing around $5,800 for the basic version, while prices are expected to go down further in the future.

Battery companies have also hopped on the market to try and secure a share of sales.

CATL giant has developed a sodium ion battery - which requires cheaper and more available materials - replacing the conventional lithium batteries. CATL announced during the auto show that Chinese Chery cars will be sold holding the company's batteries.

Breaking the stereotype

Chinese brands are "setting the benchmark now" for global markets, Johnstone said.

Several EV companies have started to expand abroad, with the highest share of expansion going to BYD, which established a presence in Norway and plans to go to other countries.

In July 2022, BYD became the world's leading electric vehicle seller, pushing Elon Musk's Tesla to second place in the growing EV market.

CEO of Zeekr, an EV company owned by Geely, told AFP that Chinese EVs are setting new trends against old stereotypes that foreigners might have had on products of the Asian country.

"Consumers are seeing a lot of innovative safety technologies, with driver assist systems that are really cutting edge," Spiros Fotinos said.

But adapting to the market is still something that Chinese companies must look carefully into, according to the report.

"Karaoke machines in cars, for example -- very popular in China, not so popular in Europe," Richards said, noting that success in Western markets is not a "done deal" unless such differences are addressed.

"Brands that have been around for a number of years... will continue to live in the future as well," he said, referring to automaker historic brand names in the industry.