What does the future hold for Chinese OEMs in and out of China.
On July 9th, Ayvens held an exclusive webinar for clients on Chinese OEMs. Moderated by Gavin Eagle, Global Director – International Key Accounts, the key speakers were Dr. Sihong Zhang, Associate Partner at McKinsey, Maite Ottes, Group Lead for Competition Law and Public Affairs at Ayvens, and Fabio Carello, Head of EV Performance at Ayvens. We’ve summarised the key insights from the webinar for you.
Changing perception of Chinese brands
Five years ago, few Europeans could name any Chinese car brands. Today, Chinese OEMs have strong brand awareness when it comes to battery electric vehicles (BEVs), with brands like BYD, Nio, and Lynk & Co gaining significant awareness.
Who are these OEMs
The Chinese automotive market is more crowded than the European market. Among the top 100 car brands in China, over 40 focus solely on new energy vehicles (NEVs), and more than 50 were founded after 2009. However, the market is consolidating, with only about 20 prominent brands out of over 200. Some brands are sub-brands of larger companies, like Ora under Great Wall. Unlike traditional OEMs, these companies create brands for specific market segments. Ora was created to target women by offering a cute pink car.
Key trends shaping the market
The past four years have been driven by five major trends:
- 1.Electrification: The shift from internal combustion engines to electric powertrains has created new market opportunities.
- 2.Diversification: Creating new brands to target emerging segments, allowing companies to learn through brand diversification.
- 3.Innovation: Focusing on enhancing customer experience, as seen in BYD’s luxury brand Yang Wang, which features unique capabilities like swimming and performing a 180-degree turn.
- 4.Value for money: Offering competitive pricing with similar features, exemplified by the BYD Dolphin being 30% cheaper than the VW ID.3.
- 5.Prestige building: Entering the luxury segment to enhance brand prestige.
Tariffs on Chinese OEMs in Europe - a timeline
September 2023: European Commission President Ursula von der Leyen highlights concerns about Chinese electric cars being kept artificially cheap through state subsidies, prompting increased scrutiny.
October 2023: European Commission investigates potential “illegal subsidisation” of Chinese OEMs.[1]
May 2024: United States impose 100% tariffs on electric cars from China.[2]
June 2024: European Commission concludes Chinese BEV producers benefit from unfair subsidisation.[3]^ ^
July 2024: As per, 5 July provisional tariffs are applied
November 2024: European Commission deadline for imposing definitive measures. These must be approved by 15 member states representing 65% of the population.
Glossary
BEV: Battery electric vehicle NEV: New energy vehicle. A common classification in China that refers to electric powertrains like battery electric vehicles and plug-in hybrid electric vehicles (PHEVs) OEM: Original equipment manufacturer