Chinese electric car makers enter Europe

MUNICH / BEIJING, Sept. 30 (Reuters) – Chinese electric car makers are launching into Europe, hoping to catch traditional auto giants cold and grab a share of a supercharged market by the continent’s trend towards zero emissions.

Nio Inc (NIO.N), among a small group of challengers, launches its ES8 electric SUV in Oslo on Thursday – the first foray out of China for a company virtually unknown in Europe even though it is valued at around $ 57 billion.

Other brands unknown to many Europeans who have started selling or plan to sell cars on the mainland include Aiways, BYD (002594.SZ) Tang, SAIC (600104.SS) MG, Dongfeng VOYAH and Great Wall’s (601633. SS) ORA.

Yet Europe, an overcrowded and competitive auto market dominated by famous brands, has proved elusive for Chinese automakers in the past. They made strategic slippages and also faced the perception that China, long associated with cheap mass production, could not compete on quality.

Indeed, Nio chief executive William Li told Reuters he sees a long road to success in a mature market where it is “very difficult to be successful.”

Chinese automakers could take a decade to “gain a foothold” in Europe, the billionaire entrepreneur said – a forecast echoed by He Xiaopeng, CEO of electric vehicle (EV) maker Xpeng (9868.HK) who has told Reuters that his company needed 10 years “to lay a good foundation” on the continent.

These new players, many of whom have only ever made electric vehicles, believe they have a window of opportunity to finally break into the lucrative market.

While sales of electric cars in the European Union more than doubled last year and jumped 130% in the first half of this year, traditional manufacturers are still gradually shifting their major vehicle lines to electric and no have yet to flood the model-hungry market.

“The market is not yet very active, if you compare it to combustion engine models where each of the major automakers owns a whole range of vehicles,” said Alexander Klose, who heads the Chinese vehicle maker’s foreign operations. electric Aiways.

“This is where we think we have an opportunity,” he added during a tour of Munich in a U5, a crossover SUV on sale in Germany, the Netherlands, Belgium and France.

The U5 starts at 30,000 euros ($ 35,000) in Germany – lower than the average price of new cars and most local prices for electric vehicles – before factoring in 9,000 euros in subsidies for electric vehicles – and is available in just four colors and two trim levels to keep costs down.

“GERMAN PEOPLE BUY GERMAN CARS”

As Chinese automakers prepare to enter Europe, they are experimenting with different business models, ranging from reliance on importers, low-cost retail options, or the creation of more traditional dealerships.

The new reality that major Western automakers like BMW (BMWG.DE) and Tesla Inc (TSLA.O) are now producing cars in Chinese technological might has likely undermined past perceptions of shoddy manufacturing – though ‘they can be difficult to shake.

Antje Levers, a teacher who lives in western Germany near the Dutch border, and her husband owned a diesel Chevrolet Orlando but wanted a greener option. They bought an Aiways U5 last year after a lot of research to fend off criticism for not buying local, and love its handling and low running costs.

She said people told her, “You can’t buy a Chinese car, they are plastic and cheap and don’t support German jobs.” But she believes that is no longer true in a global auto industry where German auto parts are found in Chinese cars and vice versa.

“The Germans buy German cars, so to buy a Chinese car you have to have a little courage,” the 47-year-old added. “Sometimes you just need to be open to new things.”

NIO LANDS IN NORWAY WITH NOMI

Nio is launching its ES8 electric SUV alongside a NIO house – part showroom, part cafe and workspace for customers in the capital of Norway, a country that is also the initial base of Xpeng.

Norwegian state support for electric vehicles has placed the country at the forefront of the switch to electric. This makes sense as a European entry point because customers are used to electric vehicles and therefore should only be sold on an unknown Chinese brand, said Christina Bu, general secretary of the Norwegian Electric Vehicle Association.

“If you go to another European country, you might find it difficult to sell both,” said Bu, adding that his organization has had extensive discussions with a number of Chinese electric vehicle manufacturers keen to learn the specifics. market and consumer culture before embarking on it.

She doesn’t know, however, how consumers will react to Nio’s approach of replacing batteries with customers rather than stopping recharging, or the automaker’s strategy of leasing rather than selling batteries to customers.

“But where the Chinese are really at the forefront is technology,” she added, referring in particular to Nomi, the digital assistant in Nio’s car dashboard.

THE STRATEGIES OF DIVERGENT NEWCOMERS

One size does not fit all. While Nio and Xpeng have hired staff to develop their organizations in Norway, SAIC’s MG works through a car importer to sell cars in a handful of European markets.

Aiways is trying a lower-cost approach to selling cars in Europe, although Klose says it varies by market.

In Germany, for example, the company sells its cars through Euronics, an association of independent electronics retailers, rather than building traditional dealerships.

It aims to sell across the EU by next year and enter the U.S. market by 2023, said Klose, a former Volvo and Ford executive.

Past unsuccessful attempts by Chinese automakers to conquer Europe are unlikely to harm Chinese electric vehicle makers today as consumers have become accustomed to electronics from China, he added. .

Among those failures was Brilliance in 2007, whose vehicle received one in five stars in a German car crash test, damaging the brand.

“Having more Chinese automakers entering the market will also help us, as it will make Chinese brands more accepted by consumers,” Klose said.

Selling cars to Europeans is “a difficult business, especially if your product is not well known,” said Arnie Richters, president of the Brussels industrial group Platform for Electromobility.

“But if they bring a lot of innovation, they have a lot of opportunities.”

($ 1 = € 0.8537)

Reporting by Nick Carey and Yilei Sun; Editing by Pravin Char

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