China’s electric vehicle surge threatens European giants

According to an analysis by Alix Partners, Chinese electric vehicle manufacturers are performing increasingly well on the global market. The primary losers here will be the German corporations Volkswagen, BMW, and Mercedes.

According to the report, Chinese companies will control one-third of the global automotive market by 2030.

The analysis conducted by Alix Partners reveals that Chinese automotive firms will also achieve increasing success in the European market. Even higher tariffs imposed by the European Union on Chinese vehicles will not change this trend in the long term.

China's growing automotive power will affect German corporations such as VW, BMW, and Mercedes, as well as companies from Japan and South Korea.

The report indicates that it is challenging for European manufacturers to compete with Chinese firms because the latter produces cheaper cars. European manufacturers' profit margins average around 15%, while their Chinese competitors achieve margins of only 7.1%.

Additionally, as noted in the report, car development cycles in China are much shorter than those of global competitors, which also benefits the expansion of Chinese enterprises.

In mid-June 2024, the European Commission imposed temporary tariffs on Chinese electric vehicles due to Beijing's "unfair subsidisation" of Chinese companies in this sector. According to the EC, the subsidies threaten EU manufacturers.

The EC stated that it has approached the People's Republic of China authorities to reach an agreement on this issue. If the talks with Beijing do not agree, the temporary tariffs will be introduced on 4 July.

The European Union is the largest recipient of Chinese electric vehicles, accounting for nearly 40% of this export.